The Cambria ETF Trust and its investment manager, Cambria Investment Management, launched the Cambria Shareholder Yield ETF (SYLD). The offering is an actively managed ETF comprised of U.S. stocks that have historically ranked among the highest in paying cash dividends, engaging in share buybacks and paying down debt. These three factors are collectively known as “shareholder yield,” the company said.
Research conducted by Cambria’s Chief Investment Officer Mebane Faber showed that focusing solely on dividends may result in suboptimal performance results for investors. Instead, a more holistic investment approach consisting of the three shareholder yield components produced a portfolio of companies that possess stronger free cash flow characteristics and generated higher shareholder yields than their dividend-only counterparts.
The Cambria Shareholder Yield ETF employs a quantitative algorithm to select 100 U.S. stocks with market caps greater than $200 million, as assessed by the shareholder yield qualifications. The fund offers investors a diversified portfolio of companies, ranging in size, industry and sector, and is managed to ensure that no one sector is over concentrated. The ETF also employs value, quality and momentum factors in the final portfolio selection. The fund expects to pay yearly dividends.
“Investors continue to search for income, but they should be wary of a narrow focus on dividends,” said Faber. “Historically, assessing stocks based on their collective shareholder yield is a strategy that has outperformed vanilla dividend investing.”