Income-oriented equity investors are always looking for attractive dividend yields at reasonable valuations. But many investors are now finding higher dividends in parts of the market that have become expensive.
We believe Oppenheimer Ultra Dividend Revenue ETF (RDIV), which invests in the top 60 dividend-yielding large- and mid-cap stocks in the S&P 900 Index, offers an appealing alternative. The portfolio reweights those highest dividend-yielding stocks by revenue. Further, its systematic quarterly rebalancing helps it maintain high yields and low valuations, while enhancing its potential to deliver strong performance.
Quarterly rebalancing has historically allowed RDIV to buy low and sell high. By placing a 5% cap weighting on any one stock, the portfolio avoids overexposure. Using the S&P 900 universe for stock selection avoids the common behavioral bias of overweighting large-cap stocks when searching for dividends.
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The S&P 900 Index combines the large-cap S&P 500 Index and the S&P MidCap 400 Index. It addresses the needs of investors who want to benchmark or invest in the large- and mid-cap segments of the U.S. market. Indices are unmanaged, include the reinvestment of dividends and cannot be purchased directly by investors. Index performance is shown for illustrative purposes only and does not predict or depict the performance of the Fund. Past performance does not guarantee future results.
An investment in the Fund is subject to investment risk, including the possible loss of the principal amount invested. There is no guarantee that the issuers of stocks will declare dividends in the future, or that dividends will remain at their current levels or increase over time. The Fund is classified as a “non-diversified” fund and may invest a greater portion of its assets in the securities of a single issuer. Investing significantly in a particular region, industry, sector or issuer may increase volatility and risk. Fund returns may not match the return of its respective index, known as non-correlation risk, due to operating expenses incurred by the Fund. The alternate weighting approach employed by the Fund (i.e., using revenues as a weighting measure), while designed to enhance potential returns, may not produce the desired results. Because the Fund is rebalanced quarterly, portfolio turnover may exceed 100%. The greater the portfolio turnover, the greater the transaction costs, which could have an adverse effect on Fund performance.
These views represent the opinions of the portfolio managers at OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.