The Cambria Shareholder Yield ETF (SYLD) offers active exposure to U.S. stocks with attractive cash flow characterized by dividends, share buybacks and net debt paydown, explains Jim Woods, editor of The Deep Woods.
SYLD actively selects U.S. stocks that exhibit high shareholder yield, which is calculated by considering a company’s cash flow measures. Selection starts with the top 20% of stocks by combining two popular themes: dividend payments and share buybacks.
The fund’s quantitative algorithm then factors in the debt paydowns of the remaining stocks and applies valuation factors. The top 100 stocks that represent the best combination of shareholder yield characteristics and value metrics form the final portfolio.
The fund equal weights its holdings during normal market conditions, and it is rebalanced and reconstituted quarterly. SYLD generally holds large-cap stocks but may invest in small- and mid-cap companies. Prior to March 26, 2018, the fund was actively managed, and before June 1, 2020, it tracked the Cambria Shareholder Yield Index.
Chart courtesy of StockCharts.com
As you can see in the chart above, the fund has done well over the trailing 12-month period, when its share price rose over 20%. In addition, it has a nice 1.42% dividend yield.
The fund has amassed $347 million in net assets. It has a 0.59% expense ratio, meaning its cost to own is on par with other exchange-traded funds in its group.
SYLD utilizes a quantitative approach to invest in U.S. equities with high cash distribution characteristics. The initial screening universe includes stocks in the United States with market capitalizations over $200 million.
The ETF is composed of the 100 companies with the best combined rank of dividend payments and net stock buybacks, which are the key components of shareholder yield. It also screens for value and quality factors, including low financial leverage.