First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) Covered Calls

First Trust SMID Cap Rising Dividend Achievers ETF is an exchange-traded fund that invests in small- and mid-capitalization companies with a history of raising dividends. The fund seeks investment results that correspond to the price and yield performance of the Nasdaq US Small Mid Cap Rising Dividend Achievers Index, focusing on dividend growth rather than just high current yield.

You can sell covered calls on First Trust SMID Cap Rising Dividend Achievers ETF to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for SDVY (prices last updated Fri 4:16 PM ET):

First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) Stock Quote
Last Change Bid Ask Volume P/E Market Cap
42.17 +0.36 21.38 63.13 1.6M - 10
Covered Calls For First Trust SMID Cap Rising Dividend Achievers ETF (SDVY)
Expiration Strike Call Bid Net Debit Return
If Flat		 Annualized
Return If Flat
Feb 20 42 0.00 63.13 -33.5% -1528.4%
Mar 20 42 0.00 63.13 -33.5% -339.7%
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Core Business and Products

SDVY is a passively managed exchange-traded fund offered by First Trust Advisors that provides exposure to small- and mid-cap U.S. companies demonstrating dividend growth characteristics. The fund tracks the Nasdaq US Small Mid Cap Rising Dividend Achievers Index, which includes companies that have increased their regular dividend payments over time. Unlike funds focused solely on high current dividend yields, SDVY emphasizes companies with a track record of dividend raises, which can signal financial health and management confidence in future earnings.

The ETF employs a rules-based methodology that screens for companies meeting specific criteria including market capitalization thresholds, dividend growth history, liquidity requirements, and financial stability metrics. Holdings are typically rebalanced and reconstituted on a regular schedule to maintain alignment with the underlying index. The fund provides diversification across sectors and individual stocks within the small- and mid-cap segment of the equity market, offering investors a single vehicle to access dividend growth opportunities in this market segment.

Competitive Landscape

SDVY competes in the dividend-focused ETF category against numerous offerings from major fund providers. Vanguard Dividend Appreciation ETF is a larger competitor focused on dividend growth but across all market capitalizations. Schwab U.S. Dividend Equity ETF also emphasizes dividend quality and growth but focuses on larger-cap stocks. ProShares S&P 500 Dividend Aristocrats ETF targets companies with 25+ years of consecutive dividend increases but is limited to large-cap S&P 500 constituents.

Within the small- and mid-cap dividend space, SDVY faces competition from broader small-cap ETFs like iShares Core S&P Small-Cap ETF and mid-cap offerings like iShares Core S&P Mid-Cap ETF, though these don't specifically screen for dividend growth. First Trust differentiates SDVY through its focus on the intersection of small-mid cap stocks and rising dividends, a niche that combines growth potential with income generation.

Strategic Outlook and Innovation

The ETF's performance and asset gathering potential depend on continued investor interest in dividend growth strategies and the small-mid cap equity market segment. As interest rates fluctuate and market conditions evolve, the appeal of dividend-focused strategies may vary among investors seeking income and total return. The fund benefits from the broader trend toward passive investing and the use of ETFs for targeted exposure to specific investment factors or styles.

First Trust continues to market SDVY as a core holding for investors seeking dividend growth with potentially higher capital appreciation than large-cap dividend stocks. The small- and mid-cap focus provides exposure to companies earlier in their lifecycle that may offer stronger growth prospects alongside their dividend policies. The fund's ongoing success will depend on the performance of its underlying holdings, competitive expense ratios, and First Trust's ability to maintain and grow assets under management through effective distribution and investor education.