Amplify launches dividend-focused natural resources ETF

Aug 30th, 2022 | By | Category: Equities

Amplify ETFs has launched a new ETF providing exposure to dividend-paying equities of companies operating in natural resource and commodity-related industries.

Christian Magoon, CEO of Amplify ETFs.

Christian Magoon, CEO of Amplify ETFs.

The Amplify Natural Resources Dividend Income ETF (NDIV US) has been listed on NYSE Arca with an expense ratio of 0.59%.

According to Amplify, the fund captures opportunities in both ‘old’ and ‘new’ energy companies as well as the related materials sector. Targeted industries include traditional energy (oil, gas, and consumable fuels), chemicals, agriculture, metals & mining, paper products, and timber.

The firm notes that dividends from energy-related companies have grown faster than any other sector of the US economy with average dollar payments having increased by more than 50% since 2018.

Christian Magoon, CEO of Amplify ETFs, commented: “We believe that select dividend-paying energy and materials stocks are positioned attractively due to strong cash flows, growing distributions, and current price-to-earnings (P/E) ratios.

“The ETF’s underlying index has a P/E ratio of 5.51 compared to 19.00 for the S&P 500. Additionally, the energy sector is currently generating higher or more attractive dividends than the S&P 500. We believe these positive attributes provide an opportunity for high monthly income potential.”

The ETF makes distributions to investors on a monthly basis. Amplify notes that any potential income would not be subject to foreign tax withholding.

Methodology

The fund tracks the EQM Natural Resources Dividend Income Index which includes US-listed equities, including American Depositary Receipts, as well as over-the-counter listed shares of global natural resource and commodity-related companies.

Eligible constituents must have a market capitalization above $5 billion, an average daily trading volume greater than $2 million, an indicated dividend yield in excess of 3%, and must derive at least 50% of their revenue from the targeted industries.

Chosen constituents are weighted by indicated dividend yield subject to a single security cap of 5%.

As of 22 August, the index contained 50 securities and exhibited a dividend yield of 9.15%.

Stocks from the US accounted for nearly a third (29%) of the total index weight with the next-largest country exposures being Canada (10%), Brazil (10%), the UK (9%), and China (6%).

Oil & gas companies made up more than half (56%) of the index’s total allocation with notable exposure also to the metals & mining (29%), and chemicals (14%) industries.

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