BlackRock has reduced the expense ratio of the iShares Core Dividend ETF (DIVB US) from 0.25% to just 0.05%, making it the lowest-cost ETF focused on US dividend-paying companies.
The fund is now the cheapest ETF targeting US dividend-paying stocks.
The fund houses $230 million in assets and is listed on Cboe BZX Exchange.
The ETF is linked to the Morningstar US Dividend and Buyback Index which consists of US-listed equities with a history of dividend payments, share buybacks, or both.
Stocks are selected from the Morningstar US Market Index on the basis of total shareholder yield – a combination of dividend yield and net buyback yield. Net buyback yield, which controls for companies using new issues, is averaged over eight trailing quarters and only companies that have returned capital to shareholders over that period are included.
Securities are selected for the index in order of decreasing total shareholder payout dollars (payout yield multiplied by market capitalization) until 90% coverage of the US stock market’s total shareholder yield is reached.
Constituents are weighted by total shareholder payout dollars, a system that, according to Morningstar, retains the benefits of market cap weighting and anchors the index in the shares of relatively stable mega-caps. The index is reconstituted annually and rebalanced quarterly.
As of 24 October, stocks from the information technology and financials sector each accounted for approximately one-fifth of the total index weight with the next-largest sector exposures being healthcare (12.5%), communication services (9.8%), and consumer discretionary (8.7%).
The index had 345 constituents, the largest of which were Apple (4.8%), Microsoft (3.9%), Meta Platforms (2.2%), and JP Morgan (2.1%).
Armando Senra, Head of iShares Americas at BlackRock, said: “Since the launch of iShares Core ETFs in 2012, clients have entrusted nearly $800 billion in assets as they’ve identified iShares Core ETFs as an efficient way to build a diversified long-term investment portfolio. The line-up has nearly tripled over the decade, part of BlackRock’s commitment to helping people achieve financial goals like retirement no matter the market climate.
“With current market conditions, our clients are revisiting their investments, looking to build resilience while searching for income. We believe iShares ETFs have a place in most Americans’ portfolios because they offer diversification, value, and efficiency which are key ingredients in building wealth over time.”