ETF Spotlight: Oil, Gold, Dividends

Between surging inflation and Russia’s war with Ukraine, investors have a lot on their minds.

Rising interest rates have spurred a rotation into cyclicals and value stocks from tech and growth shares. At the same time, oil prices continue to climb and investors continue to seek out safe haven assets as the war in Ukraine intensifies.

We look at ETFs covering oil, gold, and dividend stocks in this edition of ETF Spotlight. 

XLE: The Energy Select Sector SPDR Fund

The energy sector was the best performer in 2021 and has continued its winning streak in 2022 so far. Energy prices, especially crude oil, have been rising on the back of Russia’s war with Ukraine and already-tight supplies. 

XLE provides exposure to the energy sector of the S&P 500 index. It includes companies in the oil, gas and consumable fuel, energy equipment and services industries.

As the oldest and largest energy ETF, XLE has assets under management (AUM) of $34 billion and a very low expense ratio of 0.10%. 

XLE holds just 21 energy stocks. Compared to other oil ETFs, it offers more targeted exposure to large-cap names with dividend paying track records. XLE’s distribution yield stands at 3.4% and its top two holdings – Exxon Mobil and Chevron – make up almost 45% of the fund.

These two companies are known dividend aristocrats and have been raising dividends annually for the last 30 years.

XLE top 10 holdings, as of 25 Feb 2022

GDX: VanEck Gold Miners ETF

Gold is often seen as a hedge against inflation. During periods of volatility, many investors also turn to gold as a safe haven. Physical gold does not generate a cash flow but gold miners do.

GDX gives investors exposure to gold mining companies. The fund is invested in the world’s largest gold miners such as Newmont, Barrick Gold, and Franco-Nevada. These companies make up the fund’s top three holdings with a combined weight of 38%.

GDX top 10 holdings, as of 1 March 2022

Shares of gold mining companies can benefit not just from rising gold prices but also production growth. Gold miners can use the cash flow from producing gold to make further investments into their operations. 

On the flipside, rising costs and the mismanagement of mining operations are some factors that can cause gold miners to underperform.

GDX has an expense ratio of 0.50%.

SDY, DLN, VIG: Dividend ETFs

Dividend stocks tend to exhibit lower volatility and are generally seen to be more defensive and conservative equity options.

Here are three to consider.

SPDR S&P Dividend ETF (SDY) 

  • Invests in companies that have consistently increased their dividend for at least 20 consecutive years
  • The fund is designed to hold stocks that have both capital growth and dividend income characteristics, as opposed to stocks that are pure yield
  • Top three sectors: Financials, Consumer Staples, Utilities
  • Fund distribution yield: 2.70% (last 12 months)
  • Expense ratio: 0.35%
SDY top 10 holdings, as of 25 Feb 2022

WisdomTree U.S. Large-Cap Dividend ETF (DLN)

  • Invests in dividend-paying large-cap US companies 
  • Designed to satisfy demand for growth potential and income focus
  • Top three sectors: Information Technology, Healthcare, Consumer Staples
  • Fund distribution yield: 0.75% (last 12 months)
  • Expense ratio: 0.28%
DLN top 10 holdings, as of 28 Feb 2022

Vanguard Dividend Appreciation ETF (VIG)

  • Invests in large-cap US stocks with a record of growing their dividends year over year
  • Top three sectors: Industrials, Consumer Discretionary, Financials
  • Fund dividend yield: 1.55% (2021)
  • Lowest expense ratio of the dividend ETFs highlighted here: 0.06%
VIG top 10 holdings, as of 1 March 2022

How to invest in these ETFs

If you are thinking about adding some exposure to oil, gold, or dividend stocks, there are several ways to do so.

For DIY investors, you can use Syfe Trade to invest in specific stocks and ETFs. You enjoy free trades every month and super low commissions on trades thereafter. What’s more, you get to earn more than $200 in cash credits as part of Syfe Trade’s launch promotion.

Prefer to build your own ETF portfolio? Consider using the Syfe Select Custom portfolio. You get to pick from over 100 top ETFs (including the ETFs introduced above) and determine your portfolio allocation. A Custom portfolio makes it easier to dollar cost average each month since your funds will be automatically invested into your chosen ETFs.

Ready to get started? Simply download the Syfe app and use Singpass to create your account in under 3 minutes.

Previous articleWeekly Market Wrap | 4 March 2022
Next articleInvest Like a Woman