SPY Stock | Amazing Returns of Nearly 30% Last Year

SPY Stock Analysis

SPY is an abbreviation for the Standard & Poor’s 500 Stock Index. The popular SPY stock is actually an exchange-traded fund, or ETF, that follows the S&P 500 index. SPY began trading on January 22, 1993 and has since become one of the most popular investment vehicles in the world.

The SPY ETF allows investors to track the performance of 500 large U.S. companies. Since SPY is traded the same as a stock, we will use the terms SPY stock and SPY ETF interchangeably throughout this post.

Summary Profile

Launched by State Street Global Advisors in 1993, this exchange traded fund is managed by SSGA Funds Management, Inc. and invests in publicly traded stocks in the over 25 industry groups in the US markets.

It’s focus is large cap growth and value stocks and it seeks to track the S&P 500 Index. The weight of each stock in the fund roughly corresponds with the weight of each stock in the index.

Basic Details

SPY currently holds roughly 500 companies. Sales growth, momentum, ratio of earnings change to price, certain liquidity and size requirements, and positive earnings in recent quarters are all factors taken into account by SPY stock’s managers when deciding on holdings.

To maintain proper sector representation, meeting these requirements doesn’t guarantee admission into the fund. Its direct competitors are IVV (iShare) and VOO (Vanguard). Other competitors include SPLG, SCHX, and IWB.

As a unit investment trust, it must replicate its index fully and cannot reinvest dividends between distributions. SPY stock boasts an MSCI ESG rating of AA (AAA being the highest) and a score of 7.80 out of 10. Its ESG fund quality score is in the 68th percentile versus its peers.

Holdings

SPY stock currently has the following holdings breakdown:

  • Technology: 25.60%
  • Financials: 13.75%
  • Healthcare: 13.40%
  • Consumer cyclical: 11.67%
  • Communications: 9.63%
  • Industrials: 8.15%
  • Consumer defensive: 6.61%
  • Energy: 3.68%
  • Real estate: 2.61%
  • Utilities: 2.56%
  • Basic materials: 2.26%
  • Cash and equivalents: 0.09%

As of the time of this writing, its top 10 holdings represent roughly 28% of total shares and are as follows:

  • Apple: 6.85%
  • Microsoft: 5.94%
  • Amazon: 3.55%
  • Alphabet Class A: 2.21%
  • Alphabet Class C: 2.06%
  • Tesla: 1.89%
  • Berkshire Hathaway Class B: 1.65%
  • Nvidia: 1.57%
  • United Health: 1.28%
  • Meta/Facebook: 1.28%

Dividend Information

SPY stock has a current dividend yield of 1.32%, which is slightly below the index’s average yield of 1.47%. It pays its dividend quarterly and did so most recently on December 20, 2021. The payout was $1.62 per share.

Its dividend growth rate has been inconsistent since inception. Here is a history of its dividend growth:

YearPayoutYear End YieldYoY Payout GrowthCAGR
2021$5.721.20%0.48%
2020$5.691.54%1.29%0.48%
2019$5.621.80%10.16%0.88%
2018$5.102.15%6.21%3.88%
2017$4.801.93%5.80%4.46%
2016$4.542.22%7.92%4.73%
2015$4.212.30%9.66%5.25%
2014$3.842.13%14.45%5.87%
2013$3.352.11%7.98%6.91%
2012$3.102.58%20.47%7.03%
2011$2.582.49%13.65%8.30%
2010$2.272.23%4.06%8.78%
2009$2.182.46%-19.96%8.38%
2008$2.723.89%0.76%5.88%
2007$2.702.44%10.38%5.50%
2006$2.452.32%13.91%5.82%
2005$2.152.36%-2.19%6.31%
2004$2.202.53%34.71%6.88%
2003$1.632.08%8.81%7.22%
2002$1.502.45%5.24%7.30%
2001$1.421.83%-5.46%7.20%
2000$1.511.71%4.24%6.56%
1999$1.441.48%2.03%6.45%
1998$1.421.74%2.81%6.26%
1997$1.382.18%-1.30%6.11%
1996$1.402.96%9.11%5.80%
1995$1.283.31%4.21%5.93%
1994$1.234.38%8.15%5.87%
1993$1.134.08%6.74%

Historical Returns

Here are SPY’s returns for the past few years (through 2021):

  • 2021: 28.59%
  • 2020: 18.25%
  • 2019: 31.29%
  • 2018: (4.45%)
  • 2017: 21.69%

Trading Data

  • Average Daily Trading Volume: 109,272,000
  • Net Asset Value: $269.86
  • 52-week high and low prices: $287.32 and $218.22
  • 200 day moving average price: $259.02

Peer Analysis

IVV and VOO are both passively managed ETFs that track the S&P 500 Index. SCHX is also an index fund, but it tracks the Dow Jones Industrial Average. Out of these three funds, The iShares Core S&P 500 ETF (IVV) has yielded the best returns over the past five years at a tick under 18%.

All these funds have a Morningstar rating of five stars out of a possible five. All also have AA MSCI ESG score ratings. VOO, IVV, and SCHX have expense ratios of 0.03% while SPY stock costs more to own at 0.09%. That said, SCHX pays the best dividend at 1.41%.

Risk Profile

SPY stock’s risk profile is about average when compared to its peers. Its three-year standard deviation is 14.39% while the category average is 14.51%. Its Sharpe ratio of 0.72 (higher is better) means that it has outperformed 66% of similar funds over the past three years.

SPY’s risk profile becomes more clear when we compare it to its top holdings. For instance, Amazon’s (AMZN) five-year standard deviation is 42.47%. That means that if you had invested $100 in Amazon five years ago, your investment would have been worth anywhere between $0 and $428 today!

Technical Analysis

The technical analysis of SPY stock is pretty straightforward. The price has been in an uptrend for the past few years, and it looks like this trend will continue for the foreseeable future. The indicators are all pointing in the right direction, and there is plenty of room for prices to move higher.

Right now the 14-day relative strength index (RSI) is about 40, so that’s neutral. The MACD level (12, 26) is -6.63, which indicates a sell. It is about halfway between its pivot point and first support.

Fundamental Analysis

Apple: largest holding in SPY stock and S&P 500 Index

Microsoft: second largest holding in SPY stock and S&P 500 Index

Amazon: third largest holding in SPY stock and S&P 500 Index. Also, recently became the first company to be worth $1000 billion.

Alphabet Class A/C: fourth and fifth largest holdings in SPY stock and S&P 500 Index. Google is now a subsidiary of Alphabet Inc. which is why there are two listings for it here. Tesla: sixth largest holding in SPY stock and S&P 500 Index. Recently surpassed Ford in market value.

Berkshire Hathaway Class B: seventh largest holding in SPY stock and S&P 500 Index. Warren Buffett is the CEO of Berkshire Hathaway.

Nvidia: eighth largest holding in SPY stock and S&P 500 Index. A leading company in artificial intelligence and graphics processing units (GPUs).

United Health: ninth largest holding in SPY stock and S&P 500 Index. One of the Big Five health insurance companies in the United States along with Anthem, Cigna, Aetna, and Humana.

Meta/Facebook: tenth largest holding in SPY stock and S&P 500 Index. Facebook owns Instagram, WhatsApp, and Oculus.

Trading Strategy

When it comes to trading SPY stock, there are a few things to keep in mind. First, it is important to know when to buy and when to sell. Second, it is important to know how long you should hold onto the stock. Third, it is important to have a plan for if the stock price goes up or down.

Here are a few trading strategies that can be used with SPY stock:

  • Buying when the stock price is low and selling when the stock price is high: if only it were that easy
  • Holding onto the stock for long-term growth: unless you have a lot of time on your hands for research and trading, you should plan to hold a stock for at least 3-5 years
  • Using stop-loss orders to limit losses: you can even set trailing stops that will automatically execute a sell order if a stock loses a specified percentage of its value within the day
  • Using limit orders to maximize profits: do your research to figure out how much you feel the stock’s worth, then set a limit order for that amount so you don’t overpay
  • Trading around earnings announcements: if you’re on the live call, you can profit by buying or selling around earnings, but the volatility makes it hard to find a good exit or entry point
  • Trading on news and rumors: this is probably the least successful because, again, you’re always going to be behind the news, especially compared to the traders on the floor on Wall Street

Conclusion

To sum it up, SPY stock is a great way to get exposure to the S&P 500 Index. It is a large cap growth and value fund that has a low risk profile. The dividend yield is decent, and the dividend growth rate is solid. The Morningstar rating is high, and there is little chance of tracking error. Overall, SPY stock is a great choice for investors seeking exposure to the US stock market.

If you’re looking for more information on SPY stock, be sure to check out our website for more articles like this one! We offer free resources and analysis on all major US stocks. Thanks for reading!

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