SDIP
Super Dividend Re-evaluated
The Oak Bloke
Jul 28
For those who followed my idea “should you be SDIP-id” on 14th April today at £7.14 per share you’re now £1.06 better off (£6.08 → £7.14) and have enjoyed 4 months of dividends worth £0.23.
£1.29 total is a 21.2% return in just over 3 months. I’m very happy with that and my finger hovered over the sell button. I started writing this thinking I was going to call time on it.
But then I look at what’s up and what’s down. After all, SDIP blindly rebalances based on companies based on a set of eligibilities. Just like fellow fun runner Mr Head it arbitrarily gets rids of any company that breaks its rules. To replace it SDIP picks the next best one (judged on highest eligible yield) that it doesn’t already own. It also periodically rebalances so it part sells what’s gone up to reduce the holding back to 1% and buys more of what’s gone down to rebalance those to 1% also, so each quarter everything rebalances to 100 shares of 1% each.
So this ETF potentially waters its weeds and trims its flowers, with the important exception that the weeds have to also flower (deliver dividends) and any that either cut dividends or profit warn that indicates they could prospectively cut then get removed. So SDIP waters its weeds OR remove its weeds – it’s an important distinction. But it does trim its flowers back to 1% of fund regardless of how successful they are.
Eligible companies must have:
No official announcement (e.g. RNS), at the quarterly rebalance dates, that dividend payments will be cancelled or significantly reduced in the future.
Market Cap >$500 million.
Average liquidity >$1 million over the last three months.
Primary listing in a Developed Market or Emerging Market (but excludes India, China, and Argentina). (Includes Hong Kong)
Dividend yield of >6% and <20%, if they are not current constituents, and at least 3% if they are current constituents.
Traded on 90% of the eligible trading days for the previous 6 months.
Free Float percentage of total shares outstanding of at least 10% or a minimum Free Float Market Capitalisation of $1 billion.
No Closed End Fund, Business Development Companies (BDCs), Partnership or Investment Trusts.
There is a quarterly rebalance back to 100 constituents at 1%, with the highest yield (that meet the above criteria)
SDIP delivers around ~0.8% yield per month so about a 10% per annum:
Let’s look at the biggest risers:
5.2X bagger Bright Smart based in Hong Kong is a cash offer buy out by Morgan Stanley. That’s interesting, the South and SE Asian markets are red hot with IPOs in 2025.
2 holding SES, covered previously, is up 60% is a beneficiary of European military spend.
Marfrig is a large Brazilian Beef producer up 49%. Record exports are behind the rise.
BW LPG is a tanker fleet operator up 37% on growing profits.
Kenon is a renewable energy producer based in Texas. That’s interesting too. That is thriving, up 32% YTD, so energy producers are still doing well even if President Trump dislikes them. There’s strong demand for energy.
Now let’s consider the downs.
100 place lender Ready Capital I saw last time and this is down another 15% to a -40% drop, they do say the US housing market is in trouble.
#99 Two Harbors another Real Estate investment trust, cut its dividend too.
#98 Franklin Real Estate Finance – a third one to cut their dividend. So three that will drop away and in the bottom 10 I spot several more US Realty companies.
97 Turk Tractor
The clue is in the name and this manufactures 2/3rd of Turkish tractors and sells to 125 countries also. It also makes Farm Machinery like combine ‘arvesters, and Construction Equipment (diggers, loaders, bulldozers) The Turkish economy has been…. challenging.
Interest rates peaked at 58.8% and are now “only” 42.6%. The Turkish government gives a 50% interest rate subsidy bring the cost of finance to 21.3% but even this is painful. Its profits have dropped 90% and a dividend will be impossible. So it’s SELL SELL and Bye Bye Turk Tractor.
There are more Real Estate losers and bits and bobs, and overall the trust sums to 99.9% so its winners have managed to offset the losers since the last rebalance.
Of the 100 there are 8 UK holdings. Those are up on average 9.6% since the last rebalance, and I’m happy with all of those.
Percentage return of the UK-listed components of SDIP since last rebalance in May 2025
Of the others it’s interesting to see Europe, HK, Israel all are generally strong performers while the US, SE Asia and BRICS nations underperform. Trump Tariff fall out anyone? (100% is the initial 1% holding at the last rebalance, so holdings traded in France are up 26% for example, while Indonesia is down -21%.
With “deals” now completing (the EU completed as I write) then perhaps the tariff issue improves going forwards (or weeds get cut)
Conclusion
I’m not going to sell SDIP. I said I’d revisit and revisit I have. This gives exposure to large cap dividend-paying companies that you wouldn’t otherwise easily access and yet is far more focused than a global index.
There is a 0.45% management charge plus trading costs (quarterly) which I expect aren’t awfully high, but I couldn’t find what they were (the TER isn’t disclosed that I could see).
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