VSDA ETF

The VictoryShares Dividend Accelerator ETF (VSDA) has underperformed its peers over the past five years, despite consistent dividend growth. VSDA's portfolio lacks significant exposure to high-growth sectors like technology and communication services, impacting its overall returns. The fund's valuation is in line with peers, but its higher expense ratio and lower trading volume are notable drawbacks.

VictoryShares Dividend Accelerator ETF is based on an index that screens large- and mid-caps for dividend growth potential and quality (i.e., capital efficiency and earnings stability). VSDA beat a few of its peers in the past but failed to outcompete the market. VSDA has a high-quality equity mix dominated by mega-caps.

VSDA employs a relatively complex system to select 75 U.S. securities with strong dividend growth track records. Its expense ratio is 0.35%, and the ETF manages $275 million in assets. The approach results in a stronger portfolio than the ProShares S&P 500 Dividend Aristocrats ETF. My analysis reveals nearly all of VSDA's fundamental metrics are superior. The Fund now trades at 19.38x forward earnings and yields 2.40% at current prices. It also features stronger earnings growth, and its constituents are on an average 35-year dividend growth streak.

VictoryShares Dividend Accelerator ETF (VSDA) focuses on large-cap stocks with a history of dividend growth. High dividend growth is a high quality factor that tends to outperform during bear markets. However, as a single factor ETF, the VSDA ETF may experience volatile relative performance, making it difficult to recommend as a long-term buy.

Passively managed VSDA capitalizes on promising U.S. dividend growth stories. It offers exposure to 75 dividend stocks, predominantly from the industrial (25.5%), consumer staples (25%), and financial (10.8%) sectors. The portfolio has a weighted-average EY of about 5.1% and a market cap of $173 billion. VSDA's valuation overall does not appeal to me, while I like its quality.

VictoryShares Dividend Accelerator ETF uses a regression-based screening mechanism to select dividend growth stocks. We compare VSDA to the largest alternative in the US dividend growth ETF space. Although we are not entirely moved by this product's qualities, we highlight a few reasons why it may do well at this juncture.