Dividend Drag

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Dictionary Says

Definition of 'Dividend Drag '

A disadvantage of the dividend structure of unit trust exchange-traded funds (ETFs) that results from SEC rules that stipulate that passively managed ETFs cannot reinvest dividends back into the portfolio. ETFs must instead accumulate the dividends in cash and pay them to holders at periodic intervals. During periods of rising markets, the dividends would be better served being reinvested in securities rather than held in cash. This leads the ETF to lag a portfolio that would be able to reinvest.
Investopedia Says

Investopedia explains 'Dividend Drag '

This is a problem in a rising market, but the same SEC rule is beneficial in a declining market. Either way, this has been a problem in ETF circles, which have been pushing for the SEC to change the rules. If this happens, dividend drag will essentially disappear.
Search results for

'Dividend Drag '

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    http://www.investopedia.com/articles/exchangetradedfunds/11/advantages-disadvantages-etfs.asp
    ... It should be noted that dividends in unit investment trust ETFs are not
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  • 3 Emerging-Market Funds with Big Yields

    http://stocks.investopedia.com/stock-analysis/moneyshow/3Emerging-MarketFundswithBigYields.aspx
    ... for the MSCI Emerging Markets Index, I also found a 7% dilution drag from 2007 ... Dividend
    stocks, to no one’s surprise, don’t issue as many shares, being in ...

  • ETF Tracking Errors: Is Your Fund Falling Short?

    http://www.investopedia.com/articles/exchangetradedfunds/09/etf-tracking-errors.asp
    ... Or ETF: Which Is Right For You?) Cash Drag Indexes don't have cash holdings, but
    ETFs do. Cash can accumulate at intervals due to dividend payments, overnight ...

  • Banks To Bank On For Next Year

    http://stocks.investopedia.com/stock-analysis/2010/Banks-To-Bank-On-For-Next-Year-BAC-BBT-BK-KEY-NTRS-STI-STT0921.aspx
    ... That results in a big drag on the S&P 500 because financials account for 16% of
    the ... Things got so bad that the company had to make a painful dividend cut. ...

  • ETFs Vs Index Funds: Quantifying The Differences

    http://www.investopedia.com/articles/mutualfund/05/ETFIndexFund.asp
    ... ETFs do not incur this degree of cash drag because of their aforementioned
    creation/redemption in-kind process. Third, dividend policy is one area where index ...

  • Industrial-Strength Performance At RPM

    http://stocks.investopedia.com/stock-analysis/2010/Industrial-Strength-Performance-At-RPM-RPM-KRA-SHW-FOE-CYT-SOA-GRA1008.aspx
    ... a little deeper sometimes pays off, for while RPM needs a better housing market
    to really do well, the stock could be an attractive dividend-plus-capital-gains ...

  • 3 Stocks Hammered By Earnings Season

    http://stocks.investopedia.com/stock-analysis/2010/3-Stocks-Hammered-By-Earnings-Season-APOLINFNIGNSPYSVU1029.aspx
    ... the company is also an S&P 500 component, but has acted as a drag on the ... SuperValu
    stock is down almost 16% on the year, but does pay a 3.3% annual dividend. ...

  • Four Stocks On Sale Right Now

    http://stocks.investopedia.com/stock-analysis/2011/Four-Stocks-On-Sale-Right-Now-ACI-AA-GSH-WHR1229.aspx
    ... Whirlpool's 4.4% dividend yield and an insider buying spree that resulted in four
    different ... This sentiment will continue to be a drag on the stock prices of ...

  • Rockwood Holdings Or PolyOne: Which Is The Better Stock?

    http://stocks.investopedia.com/stock-analysis/2011/Rockwood-Holdings-Or-PolyOne-Which-Is-The-Better-Stock-ROCPOLKKRFMCFOE.ARJ0526.aspx
    ... (For more information, check out Will Corporate Debt Drag Your Stock Down ... Business
    is going so well it also initiated a dividend in the first quarter, its first ...

  • What Investors Should Know About Interest Rates

    http://www.investopedia.com/articles/fundamental/04/061604.asp
    ... managers resigns or if the company suddenly decides to lower its dividend payments. ...
    what debt can do to your investment in Will Corporate Debt Drag Your Stock ...

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