How to Invest in iShares Core High Dividend ETF (HDV) #NewsETFs

The iShares Core High Dividend ETF (HDV 1.02%) provides simple exposure to 75 of the highest-yielding U.S. stocks at an affordable cost.

However, the ETF has underperformed other dividend ETFs in recent years due to structural issues within its methodology.

Before investing, it’s important to understand why and take a closer look at what’s under the hood.

What is it?

What is iShares Core High Dividend ETF (HDV)?

The iShares Core High Dividend ETF (HDV) tracks the Morningstar Dividend Yield Focus Indexgiving investors access to 75 high-yielding U.S. dividend stocks.

Unlike simple dividend ETFs that only screen for yield, this iShares ETF applies three additional filters to help select companies with more reliable dividend payouts.

Morningstar analysts score stocks for this index based on the following:

1. Economic moat rating: This identifies companies with sustainable competitive advantages, meaning they have strong brand power, cost advantages, or other factors that make it difficult for competitors to take market share.
2. Uncertainty rating: This measures the predictability of a company’s future earnings. The more stable a company’s profits, the more likely it is to sustain its dividend over time.
3. Distance to default score: This assesses a company’s financial health by analyzing volatility and debt levels. Companies with too much leverage or unstable stock prices are more likely to cut dividends, so this ETF filters them out.

By using these additional safety screens, this iShares ETF aims to select high-yield stocks with more reliable dividends, rather than just chasing the highest yields available.

How to buy

How to buy iShares Core High Dividend ETF (HDV)

If you’ve decided to invest in this ETF, follow these steps to purchase shares through your brokerage account:

1. Open your brokerage app: Log into your brokerage account where you handle your investments.
2. Search for the ETF: Enter the stock ticker HDV or the ETF’s full name into the search bar to bring up its trading page.
3. Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
4. Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you’re willing to pay.
5. Submit your order: Confirm the details and submit your buy order.
6. Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Holdings

Holdings of iShares Core High Dividend ETF (HDV)

This ETF’s portfolio is limited to 75 stocks at all times and is currently heavily overweight on consumer staples and energy stocks, with each sector accounting for more than a quarter of the fund.

Unlike most dividend ETFs, this iShares ETF reconstitutes and rebalances its portfolio more frequently on a quarterly basis.

Reconstitution means the ETF adds or removes stocks based on its index criteria, while rebalancing ensures each stock’s weight stays aligned with the methodology.

As a result, its holdings change frequently. Morningstar reports that the ETF has a 67% turnover rate, meaning that in a given year, two-thirds of its portfolio is replaced.

As of mid-February 2025, the top holdings included:

1. Exxon Mobil (XOM 1.54%) – 9.53%
2. Johnson & Johnson (JNJ 1.13%) – 6.98%
3. Chevron (CVX 0.99%) – 6.00%
4. Philip Morris International (PM 1.18%) – 5.37%
5. Procter & Gamble (PG 0.43%) – 5.17%
6. Coca-cola (That -0.04%) – 4.49%
7. Pepsico (PEP 2.26%) – 3.80%
8. International Business Machines (IBM 0.16%) – 3.75%
9. Altria Group (MO 1.86%) – 3.74%
10. Cisco Systems (CSCO -0.26%) – 3.72%

Should I invest?

Should I invest in iShares Core High Dividend ETF (HDV)?

This iShares ETF may not be the best ETF for income investors or beginner ETF investors due to its relative complexity and high turnover rate, despite offering a high yield and a low expense ratio.

One drawback is that its index methodology is not fully transparent, since it relies on qualitative scoring from analysts to select stocks. This makes it harder to evaluate why certain companies are included or excluded compared to simpler dividend ETFs that use more objective, rules-based criteria.

Additionally, this ETF is heavily concentrated in just two sectors—consumer staples and energy, which together make up more than 50% of the fund.

With only 75 holdings, diversification is more limited than in broader dividend ETFs or mutual funds.

Finally, its high turnover rate means the ETF is constantly replacing stocks, making it difficult for long-term winners to compound gains.

Investors seeking a more stable, long-term dividend growth strategy may prefer an ETF with lower turnover and broader diversification.

Dividend

Does iShares Core High Dividend ETF (HDV) pay a dividend?

This ETF pays a dividend on a quarterly basis. As of mid-February 2025, it had a 3.7% 30-day SEC yield. Since this iShares ETF excludes real estate investment trusts (REITs), its dividends are more tax-efficient than those from ETFs that include real estate holdings, since they qualify for lower tax rates on eligible dividends.

Expense ratio

What is iShares Core High Dividend ETF (HDV)’s expense ratio?

This iShares ETF has an expense ratio of 0.08%, meaning investors pay $8 annually for every $10,000 invested. This cost is not paid directly but is deducted from the ETF’s performance over time, slightly reducing total returns.

For a high-dividend ETF, this expense ratio is considered low, making it a cost-effective choice for long-term ETF investors who want dividend income without excessive fees eating into their returns.

Historical performance

Historical performance of iShares Core High Dividend ETF (HDV)

Here’s a look at this ETF’s annualized total return (i.e., with dividends reinvested) over various trailing periods:

The bottom line

The bottom line on iShares Core High Dividend ETF (HDV)

The iShares Core High Dividend ETF offers high-yield dividend exposure with a low expense ratio, but its qualitative stock selection process, sector concentration, and high turnover rate make it less straightforward than other dividend ETFs.

While it provides high income and tax efficiency, its limited diversification of 75 holdings and frequent rebalancing may not appeal to all investors.

Beginner investors seeking a simple, stable dividend strategy may prefer an ETF with broader holdings and lower turnover.

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