With earnings week well underway this Tuesday, investors have much to look forward to in stock news. All sorts of firms are reporting their Q2 earnings, including the intriguing high-end tools manufacturer Snap-On Inc (SNA). For investors looking to play the Snap-On earnings arriving Thursday, the ALPS Sector Dividend Dogs ETF (SDOG) can help. The strategy’s reliance on dividends as well as its weight towards SNA may make it an intriguing ETF to watch.
SNA, based out of Kenosha, Wisconsin, has already risen significantly YTD from about $228 to nearly $300. The stock is currently sitting on a solid forward price-to-earnings ratio of 16.68, per YCharts, returning 30.7% YTD. Market previews for the earnings call emphasize the firm’s earnings surprise last quarter as well as expected growth to its gross margin. That said, the firm does face some inflationary challenges tied to its supply chain.
Should SNA offer another earnings surprise and some appealing positive news, SDOG could be one way in. SDOG weights SNA at 2.1% as part of its equal-weighting scheme. The strategy allocates assets equally to each of its 10 sectors, looking for the stocks with the highest dividend yields.
So while the strategy doesn’t have the highest weight towards the stock, its current income makes a nice bonus. SDOG currently offers a 4% annual dividend yield, for example. The Siren DIVCON Dividend Defender ETF (DFND) weights it at 4.9%, for example, but charges a massive 150 basis point (bps) fee. SDOG provides a route into Snap-On earnings for a much lower fee of just 36 bps, meanwhile.
See more: “The Bull Case for High Dividend ETFs in SDOG”
That current income from dividends can then be reinvested in other ETFs. What’s more, joining in for Snap-On earnings means joining in for SDOG’s technical action. The ETF is showing some solid momentum, with its price rising above its 200-day simple moving average briefly on Tuesday, per YCharts.
Taken together, SDOG can provide an intriguing option for those eager to play Snap-On earnings. For those investors intrigued by how the firm might ride a broader rebound in manufacturing, the equal sector ETF may be one to watch.
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for SDOG, for which it receives an index licensing fee. However, SDOG is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SDOG.
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