The ALPS O'Shares U.S. Quality Dividend ETF Shares (OUSA) is designed to identify high-quality, large-cap companies through a rigorous screening process. This methodology emphasizes factors such as return on assets, manageable net debt-to-EBITDA, stability in historical returns, and consistent five-year dividend growth. However, despite its focus on robust financial health and dividend expansion, the fund's current estimated dividend yield is rather modest at 1.40%, a figure significantly impacted by its 0.48% expense ratio. Notably, the top five holdings within OUSA exhibit even lower individual yields, all falling below the 1% mark.
While OUSA demonstrates commendable quality metrics, including strong financial positions and a growth-at-a-reasonable-price (GARP) profile that has shown improvement, its overall performance in terms of risk-adjusted returns trails behind prominent peers. When compared to exchange-traded funds like Vanguard Dividend Appreciation ETF (VIG) and iShares Core Dividend Growth ETF (DGRO), OUSA's total returns and income generation capabilities appear less competitive. These alternative funds often present more attractive options for investors prioritizing income, sustained dividend growth, and superior total returns.
In conclusion, while OUSA's commitment to selecting high-quality dividend-paying stocks is clear, its lower yield and historical underperformance in risk-adjusted returns relative to key rivals suggest that it may not be the optimal choice for investors seeking robust dividend income or superior overall investment growth. Therefore, a cautious stance is warranted, and the fund is assigned a "hold" rating. Investors might find better opportunities for both income and capital appreciation in other established dividend growth ETFs.