SPDR S&P 500 High Dividend ETF vs. Global X SuperDividend ETF: Which High-Yield ETF Reigns Supreme?

Global X SuperDividend U.S. ETF vs. SPDR Portfolio S&P 500 High Dividend ETF: Which Is the Better High-Yield ETF?

Global X SuperDividend U.S. ETF (NYSEMKT: DIV) and SPDR Portfolio S&P 500 High Dividend ETF (NYSEMKT: SPYD) both aim to invest in high-yield stocks, but they use different strategies. Is SPDR Portfolio S&P 500 High Dividend ETF’s 4.1% yield a better choice than Global X SuperDividend U.S. ETF’s 5.4% yield?

What does SPDR Portfolio S&P 500 High Dividend ETF do?

SPDR Portfolio S&P 500 High Dividend ETF focuses on dividend-paying stocks within the S&P 500. It selects the 80 highest-yielding stocks and uses an equal-weighting methodology, ensuring each stock has the same impact on performance.

What does Global X SuperDividend U.S. ETF do?

Global X SuperDividend U.S. ETF is more complex. It screens stocks based on beta (volatility relative to the market), selecting those with betas of 0.85 or less. It also filters out stocks with dividend yields below 1% or above 20%, ensuring dividends have been paid for at least two years and are at least 50% of the previous year’s dividend. It then selects the 50 stocks with the highest dividend yields and applies equal weighting.

Beta versus the S&P 500 index… and equal weighting

Both ETFs use equal weighting to limit the impact of any single stock. SPDR Portfolio S&P 500 High Dividend ETF relies on the S&P 500’s selection criteria, while Global X SuperDividend U.S. ETF uses beta to find lower-volatility stocks. Both aim to reduce risk, but their approaches differ.

Beta appears to be a limiting factor

Global X SuperDividend U.S. ETF has lagged behind SPDR Portfolio S&P 500 High Dividend ETF in total return over time. While Global X SuperDividend U.S. ETF has a higher yield, it has lost about 25% of its value over the past decade, compared to a 45% increase for SPDR Portfolio S&P 500 High Dividend ETF. This 70-percentage point difference highlights the impact of beta on performance.

There’s a pretty clear winner for dividend investors

For long-term investors, SPDR Portfolio S&P 500 High Dividend ETF appears to be the better choice. Its growing asset base allows it to produce more dividends, while Global X SuperDividend U.S. ETF’s shrinking capital base limits its dividend-generating ability. Unless specifically seeking to limit near-term volatility, SPDR Portfolio S&P 500 High Dividend ETF is the preferred option for buy-and-hold investors.