SoFi Weekly (WKLY) Dividend EFT Review
Dividend payments are a great form of hassle-free income: Just buy a stock that pays a dividend, sit back, and collect your “cash.” But some investors think that dividends come too infrequently. After all, most companies pay dividends on a quarterly basis. Before we get to the SoFi Weekly Dividend ETF review, consider how weekly dividends would work.
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How to Get Weekly Dividends
What if I told you that you could get dividends every week? It’s actually quite simple. All you have to do is buy 12 or more different dividend stocks and ensure that every company pays its dividends staggered exactly one week apart from one another.
Of course, I’m joking. Finding such a set of dividend equity securities or stocks – and performing the due diligence for those companies (doing the research to ensure the companies are financially sound and able to provide dividend sustainability – i.e., ensuring the companies won’t suddenly cut their dividends due to fundamental business issues) – is a monumental task even for the experienced individual.
Fortunately, you have an easier way to create a fixed income via weekly dividends, you might buy the Sofi Weekly Dividend ETF (WKLY).
About the SoFi Weekly Dividend ETF
A common complaint from dividend investors – especially those using dividends as a significant source of income – is that the time between dividend payments is unrealistically long, considering that most people have monthly, not quarterly, bills. The SoFi Weekly Dividend ETF was created to address this complaint. The SoFi Weekly dividend ETF lives up to its name by making weekly dividend payments to investors. The WKLY ETF worries about stock dividend growth, so you don’t have to.
How Does SoFi WKLY Work?
SoFi WKLY is a passively managed fund, which means that it is meant to mirror an index. The benchmark index is the SoFi Sustainable Dividend Index, which is defined and tracked – according to the fund’s SEC filing – as follows:
The Index follows a rules-based methodology (described generally below) that tracks the performance of the equity securities of publicly-traded, large- and mid-capitalization U.S. and non-U.S. companies in developed markets that are selected based on a set of sustainable dividend filters. The Index is owned and administered by Solactive AG (the “Index Provider”), and the Index Provider partnered with Social Finance, Inc. (“SoFi”) to co-develop the methodology used by the Index to determine the securities included in the Index. SoFi is not involved in the ongoing maintenance of the Index or any discretionary decisions relating to its application, and does not act in the capacity of an index provider. SoFi has licensed certain of its trademarks to the Index Provider for use in connection with the Index.
SoFi Weekly (WKLY) Prospectus – SEC Document
Thus, SoFi WKLY buys and holds the equity securities in the SoFi sustainable dividend index, collects those stocks’ dividend payments, and distributes the dividends on a weekly basis to the owners of the SoFi Weekly Income ETF.
What is the SoFi Sustainable Dividend Index?
The official description of the SoFi Sustainable Dividend index is a bit convoluted. In layperson’s terms, the SoFi Sustainable Dividend index includes a set of companies that have successfully paid their dividends for the past twelve months and are expected to continue making dividend payments over the coming twelve months. In addition, the index is weighted by market capitalization and rebalanced quarterly, according to SoFi. Simply, the WLKY dividend ETF is a collection of dividend-paying companies that have been screened to have a high probability of continuing their dividend payments in the future.
SoFi WKLY Dividend ETF Details
WKLY indeed distributes dividends to shareholders every week, on Thursday. WKLY has an expense ratio of 0.49%.
The current weekly dividend payment is two cents per share. At the time of writing WKLY is trading at $45.88. All together, you are paying $51.36 for one share of WKLY, producing $0.02 (per share)*52 worth of dividend payments per year. As companies raise their dividend payments, your payouts should also increase.
At present, WKLY’s annual dividend yield is 3.45%. In contrast, SPDR S&P 500 Trust ETF’s (SPY) 500 dividend yield is 1.56%. So, WKLY provides weekly dividend payments that are more than double the dividends paid by the aggregate of all companies in the S&P 500. This data is accurate today, and will change along with the price of the ETF.
It’s useful to understand, that the dividend payment percent varies based upon the value of a stock, or fund. All other factors remaining constant, when a stock price declines, the dividend payout percent will increase, and vice versa.
What are the SoFi Weekly (WKLY) Dividend ETF Holdings?
If you take a look through either the SoFi Sustainable Dividend Index or at WKLY’s actual holdings, you’ll find a basket of companies that have a number of commonalities. These companies have the following characteristics:
- Liquid: Heavily traded in the stock market (and thus easy to buy and sell)
- Mature: Most sustainable dividend companies have long histories
- Mid-cap or larger: The minimum market cap for inclusion in the index is $1B
- Reasonable payout ratio: Dividend payment sizes are a percent of the company’s earnings
- Low debt: A low debt-to-equity ratio reduces the risk of a dividend cut
- Are not in selling off: Stocks that greatly underperform are excluded from the index
In addition, the fund adheres to a couple more rules to reduce risk:
- No individual company comprises more than 5% of the fund.
- No individual sector comprises more than 30% of the fund.
The end result is a balanced portfolio of dividend stocks. I must admit, this basket of stocks is not very exciting – in fact, it looks outright boring to anyone seeking growth. However, it is a relatively safe selection of stocks likely to continue producing dividend income, which is exactly what WKLY is meant to do.
WKLY’s top 10 current holdings:
| Portfolio Weight | Name | Ticker |
|---|---|---|
| 3.39% | Exxon Mobil Corp. | XOM |
| 3.16% | JPMorgan Chase & Co. | JPM |
| 3.02% | Johnson & Johnson | JNJ |
| 2.78% | Procter & Gamble Company | PG |
| 2.69% | Broadcom Inc | AVGO |
| 2.08% | Merck & Co Inc | MRK |
| 2% | Chevron Corp. | CVX |
| 1.75% | Coca Cola Company | KO |
| 1.66% | Cisco Systems, Inc. | CSCO |
| 1.56% | Toyota Motor Corp ADR | TM |
What is the Geographic Breakdown of SoFi WKLY Holdings?
The weekly dividend ETF is internationally diversified. This provides the dividend investor with added diversification, over a U.S. only dividend growth fund.
SoFi WKLY holdings are concentrated with 64.64% in North America, and the remaining companies spread across the globe:
| Country | Percent |
|---|---|
| United States | 58.55% |
| Japan | 8.81% |
| Canada | 6.09% |
| Switzerland | 5.69% |
| France | 4.41% |
| United Kingdom | 4.01% |
| Germany | 4.00% |
| Australia | 2.33% |
| Singapore | 1.16% |
| Spain | 0.97% |
| Additional countries | 3.98% |
What is the SoFi Weekly (WKLY) Dividend History?
Since its inception in May, 2021, the WKLY ETF has paid an $0.02 weekly dividend. On December 27, 2022, WKLY paid a one-time dividend of $0.47388.
At the current price of $46.27, the 12-month yield is 3.45%.
The annual return on the WKLY dividend ETF will depend upon the dividend history, the share price and whether you reinvest the dividends or receive them as a cash payment.
SoFi Weekly (WKLY) Dividend ETF Pros and Cons
If your goal is weekly dividends, WKLY is probably on your investment watchlist. But before you pull the trigger, let’s review some of the pros and cons that are likely to influence your satisfaction with this fund.
Pros
- Weekly dividends. A fund that pays dividends at this frequency is difficult to find. This might be the number one competitive advantage of WKLY over other dividend paying ETFs, which might pay dividends monthly or less frequently.
- Compounding potential. Smart lottery winners typically take a lump sum because they know that money now can be put to good use. The weekly dividends can be re-invested and compounded, allowing you to realistically earn more than the stated ROI that WKLY produces on paper.
- Passive. While some investors like actively managed funds, the fact that WKLY is passively managed saves you the time of performing due diligence on the management team. The fact that WKLY tracks an index gives the fund transparency.
Cons
- Higher yields are available. A 3.45% yield is reasonable, in todays economic and financial market, with an all stock dividend portfolio. Yet, there are other higher yield dividend bond funds, at present. You can also uncover higher yielding dividend stock ETFs.
- Lower fee dividend ETFs might be available. A 0.49% expense ratio is reasonable. Yet, there are other dividend ETFs with lower expense ratios. The Schwab US Dividend Equity ETF (SCHD) carries a 0.6% expense ratio.
SoFi Weekly (WKLY) Dividend ETF Alternatives
WKLY is not the only game in town. I suggest you look at the two following alternatives – one paying weekly income but not financed by dividends; and another with a basket of stocks similar to those in WKLY, a better yield, but at the cost of dividend frequency.
- M1 Finance is an investment platform with premade investment pies or portfolios. Within their offers they have quite a few dividend Pies or portfolios. You can invest in stock and bond dividend Pies and M1 will rebalance your investments according to your preferred asset allocation.
- TGIF: The SoFi Weekly Income ETF. In practice, this fund acts a lot like WKLY. The main difference is that the weekly payouts are not financed by dividends but by bonds. Moreover, TGIF is an actively managed fund and a bit more expensive than WLKY, with an expense ratio of 0.59%.
- GCOW: Pacer Global Cash Cows Dividend ETF. As with WKLY, GCOW is passively managed, meaning it mirrors an index. The benchmark index for GCOW is the Pacer Global Cash Cows High Dividends 100 Index, which essentially ensures that GCOW’s holdings will all be dividend-paying companies with large free cash flows. In this way, GCOW is another fund with a basket of safe dividend payers, though it does not pay at a weekly rate.
FAQ
The “best” is subjective, and in the world of investing, “best” really just means most suitable for you given your financial goals and risk tolerance. At the time of writing, SoFi has nine ETFs:
– SoFi Select 500 ETF (SFY) – Tracks the S&P 500
– SoFi Next 500 ETF (SFYX) – 500 mid-cap stocks with growth potential
– SoFi Social 50 ETF (SFYF) – The Top 50 widely held stocks on the SoFi Invest platform
– SoFi Enhanced Income ETF (THTA) – Treasury bonds and short credit spreads to generate monthly dividend income payments.
– SoFi Weekly Income ETF (TGIF) – Diverse fixed income bonds which delivers weekly interest payments.
– SoFi Weekly Dividend ETF (WKLY) – Diverse dividend-paying stocks which delivers weekly dividend payments.
– SoFI Web 3 ETF (TWEB) – Companies building the next generation of the internet.
– SoFI Smart Energy ETF (ENRG) – Companies building a cleaner and more reliagle energy system.
– SoFi Be Your Own Boss ETF (BYOB) – Companies advancing the way people shop and work.
Each of these ETFs has its own purpose. Currently, SFY waives the expense ratio, making it fee-free. WKLY and TGIF deliver weekly payments. The best SoFI ETF for you depends upon your personal goals and time horizon.
The answer depends on your financial goals and and interest in researching investments. If you are willing to trade time to research individual companies and rebalancing your portfolio then you might prefer to build your own dividend stock portfolio and avoid paying a fund expense ratio. Then again, not every investor has the experience or knowledge to select good dividend stocks.
Ultimately, whether Dividend ETFs are worth it depends upon whether you’re seeking cash flow from your investments and if you want to research and buy dividend stocks on your own. The easy alternative to becoming a dividend investor is to just buy dividend ETFs.
SoFi Tehcnologies Inc Ordinary Shares (SOFI) does not pay dividends. This is the company stock. While many of the SoFi ETFs offered by the company do pay dividends.
SoFi Weekly (WKLY) Dividend ETF Wrap-up
WKLY is a passively managed ETF with quality screening to ensure that the dividend stocks within the fund are financially sound. The holdings are also quite diversified, both in terms of sector and geography. Of course, the main draw is the consistent WKLY dividend history, which currently pays $0.02 cents per share every week.
To determine whether this WKLY dividend ETF is for you, you’ll need to decide whether you need weekly income payments. If so, then you’ll need a significant number of shares to realize a reasonable cash flow. If you reinvest the dividend payment in additional shares each week, you’ll grow your number of shares.
For those with a large amount to invest, seeking weekly cash flow, then WKLY is a reasonable option. But if you don’t need weekly cash flow, and can settle for monthly or quarterly cash flow, there are a range of both stock dividend ETFs and bond ETFs which deliver regular cash flow.
If you are seeking cash flow and have a six or seven figure diversified investment portfolio, you don’t need to rely on dividends for cash flow. There’s no rule that states that you can’t sell shares of stock to achieve regular cash flow. The only time this is a real problem, is if you’re selling after a major market decline. But, with diversified stock, bond and cash holdings, you can construct your portfolio to avoid that pitfall.
Another alternative to the WKLY dividend ETF is a mix of high yielding stock, bond and REIT ETFs. Overall, WKLY is a niche product.
Learn more about SoFi Weekly Dividend, stock ETF, as well as the company’s other stock, ETF, crypto and automated investing investment products here:
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- Should I Invest In Dividend Stocks Now?
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- SoFi Relay Review – Get Financial Insights
- What Is An ETF and How To Invest In ETFs?
- M1 Pies – Which Are The Best M1 Pies For You?
Sources
- SoFi. “SoFi Weekly Dividend ETF Factsheet.” https://8096772.fs1.hubspotusercontent-na1.net/hubfs/8096772/Website%20Fund%20Documents/WKLY/WKLY_FactSheet.pdf?hsCtaTracking=5c9241fa-0ab5-41a2-ae5b-b71e9330629d%7Ccae41db4-7a59-46c2-964a-b4e82b49bbe2
- SoFi. “WKLY.” https://www.sofi.com/invest/etfs/wkly
- Morningstar. “SoFi Weekly Dividend ETF.” https://www.morningstar.com/etfs/arcx/wkly/quote
- Nasdaq. ” SoFi Weekly Dividend ETF (WKLY).” https://www.nasdaq.com/market-activity/etf/wkly/dividend-history
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