Apple Leads Dow; High-Dividend, Low-Volatility Play In Buy Range

Apple Leads Dow; High-Dividend, Low-Volatility Play In Buy Range

Stocks were narrowly mixed early Friday as Apple ( AAPL ) led the Dow post-earnings and October payroll data came in weaker than expected.

[ibd-display-video id=2411914 width=50 float=left autostart=true] PowerShares QQQ Trust ( QQQ ) held a 0.2% gain, while SPDR S&P 500 ( SPY ) and SPDR Dow Jones Industrial Average ( DIA ) were both fractionally lower. Emerging markets lagged with iShares MSCI Emerging Markets ( EEM ) down 0.7%.

Apple gapped up 2% following its earnings and sales beat late Thursday. Shares are now slightly extended from a 160.97 cup-with-handle buy point cleared last week.

Biotech, utilities and homebuilders led the upside among sector funds in the stock market today . Gold miners, banks and real estate plays underperformed.

SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) fell 0.4% and 0.5%, respectively, as gold prices dipped 0.1% to $1,276.30 an ounce. Oil ETFs were mixed; West Texas intermediate crude prices climbed 0.2% to $54.63 a barrel.

What’s not to like about long-term performance that’s in line with the broader market and dividends that are well above average?

PowerShares S&P 500 High Dividend Low Volatility Portfolio (SPHD) has found support near its 50-day moving average after pulling back from an Oct. 20 high. That puts shares in a potential buy range . The ETF initially climbed 1.5% after clearing a 41.31 flat-base entry early last month.

The 5-year-old fund, which tracks the S&P 500 Low Volatility High Dividend Index, has amassed $3 billion in assets. The index is comprised of 50 S&P 500 stocks that historically have produced high dividend yields and low volatility. SPHD and the index are rebalanced and reconstituted twice a year, in January and July.

Real estate accounted for the biggest sector weight as of Nov. 1, at 23% of assets. Utilities made up 19.5%, information technology and consumer staples about 11% each, and energy roughly 10%. SPHD’s top holdings included Iron Mountain (IRM), Ford Motor (F) and Verizon Communications (VZ).

The three companies vary widely in terms of stock-price performance. Iron Mountain has rallied 23% this year through Thursday. Ford is up 2%, while Verizon is down 11%. But they all pay generous dividends.

IBD’S TAKE: Iron Mountain has delivered a solid performance this year, but how do its fundamentals and technicals rank in its industry group? Find out now at IBD Stock Checkup .

Iron Mountain, which provides record management and data protection services, offers a 5.9% annualized dividend. Ford’s annualized yield is 4.9%, as is Verizon’s. As such, the ETF pays a 12-month dividend of 3.5%. The average S&P 500 payout, by comparison, is 1.9%.

SPHD’s 8.5% YTD return lags the S&P 500’s 17.1% gain, according to Morningstar Direct. It’s posted average annual returns of 12.8% and 14.7% over the past three and five years, respectively, vs. the benchmark index’s 10.8% and 15% gains for the same periods.

The fund carries a 0.30% expense ratio.

Thursday’s pick, SPDR Consumer Discretionary (XLY), pulled back but remains close to a 92.65 buy point of a flat base.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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