Invesco Most well-liked Portfolio ETF: Security Dance (NYSEARCA:PGX)


“In investing, we intuitively suppose we must always make a variety of small bets. A blockbuster technique is the alternative. It means making fewer enormous investments. However it seems to be safer.” − Anita Elberse

The Invesco Most well-liked Portfolio ETF (PGX) invests at the very least 80% of its complete belongings in fixed-rate most popular securities which are a part of the ICE BofAML Core Plus Fastened-Fee Most well-liked Securities Index, and rated at the very least B3 based mostly on a median of rankings assigned by Moody’s, S&P and Fitch. PGX is designed to enchantment to earnings buyers who desire a regular earnings however discover bond yields too low and market volatility too excessive.

About 94% of PGX’s complete belongings have been invested in the popular securities of monetary, utility, actual property, and communication corporations as of February 29, 2020. I reckon the funding sample could be roughly the identical at this time as a result of the fund churns simply 18% of its holdings in a 12 months.


Picture Supply: PGX’s Semi-Annual Report

Right here is my take – once again – on PGX and whether or not it’s nonetheless ok to draw the no-risk steady-income seeker:

PGX’s Dividend Historical past

PGX is constant in paying month-to-month dividends and is on monitor to declare $0.75 in 2020, incomes it a dividend yield badge of 4.98% based mostly on its market value of $15.05 as of December 2, 2020.


Picture Supply: PGX’s Dividend History

The fund’s dividend yield averaged 5.2% in 2019 and is prone to common at 4.98% in 2020. The three-year dividend yield CAGR is a destructive 5.23%. One purpose for this might be that safe-income buyers are turning away from authorities bonds and extremely unstable common-stock ETFs, and selecting to put money into preferred-portfolio funds like PGX as a substitute.

PGX – Professionals

Other than the dividend payout and yield consistency, most popular inventory holders are prioritized over frequent inventory holders in case an organization recordsdata for chapter/liquidation. This offers extra security to PGX’s most popular shares, which even in any other case too are extremely rated.

PGX’s credit score danger could be very low as a result of it invests a minimal of 80% of its complete belongings in extremely rated most popular securities.

Its expense ratio can be low at 0.52% − and that’s one other professional.

As of August 2020, PGX’s portfolio turnover was low at 18%, which is one other benefit as a result of a low churn helps regular the dividend yield.

Peer Comparability


Picture Supply: Seeking Alpha

Although PGX scores excessive on security, and consistency of dividend payouts and yield, its 4.98% dividend yield lags behind three of its friends. The SPDR Wells Fargo Most well-liked Inventory ETF (NYSEARCA:PSK), the iShares Most well-liked and Earnings Securities ETF (NASDAQ:PFF), and the VanEck Vectors Most well-liked Securities ex Financials ETF (NYSEARCA:PFXF) can be found at dividend yields of 5.14%, 5.15%, and 5.40%, respectively (as of December 2, 2020).

PGX’s dividend yield is, nonetheless, increased than the Invesco Variable-Fee Most well-liked ETF’s (NYSEARCA:VRP) 4.28%, and on par with Invesco Monetary Most well-liked ETF’s (NYSEARCA:PGF) 4.96%.

Summing Up

Here’s a guidelines that earnings buyers can take into account earlier than investing in PGX:

  1. The fund principally invests in most popular securities which are extremely rated by Moody’s, S&P, and Fitch. An funding in PGX is, subsequently, a protected and sound funding (Security field checked).
  2. Investing in PGX is means higher than investing in authorities bonds, which supply a lot decrease yields (Above-bond-average earnings field checked).
  3. PGX is constant in paying dividends and presently affords a dividend yield of 4.98%. Its yield has been falling for the final 3 years as a result of fixed-income buyers who’re turned off by bond yields could also be investing in ETFs that put money into high quality most popular securities (Consistency field checked).
  4. That stated, three of PGX’s friends – PSK, PFF, and PFXF – provide the next dividend yield. So buyers do produce other high quality ETFs to select from (This field is unchecked).

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Disclosure: I/we’ve no positions in any shares talked about, and no plans to provoke any positions throughout the subsequent 72 hours. I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from In search of Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

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