Good news for investors in iShares S&P 500 ETF (ASX: IVV). The exchange-traded fund (ETF) — one of the largest on the ASX — is paying its latest distribution today.
Investing in ETFs allows us to own a whole group of businesses in a single investment, providing a good level of diversification. ETFs pass the dividends and distributions received from their holdings onto the fund's investors.
So, let's see what's in store for eligible IVV ETF investors.
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Final distribution for IVV ETF in FY24
Blackrock announced earlier in July that the FY24 final distribution for the iShares S&P 500 ETF would be 14.06 cents per unit.
The ex-distribution date for this payment was 1 July 2024, so investors needed to own units of the fund before this date to be entitled to the payout.
A distribution reinvestment plan (DRP) was open for this distribution, and investors had to sign up for it before today if they wanted to use it. Blackrock informed investors on 2 July 2024 that the unit price for new units issued under the DRP would be 54.45 cents.
Other distributions from FY24
The distribution that was paid three months ago to unitholders was 13.98 cents per unit.
Six months ago, the iShares S&P 500 ETF paid a distribution per unit of 15.98 cents per unit.
Nine months ago, the IVV ETF paid a distribution per unit of 17.3 cents to investors.
Strong capital growth
This ETF is not known for its passive income because its underlying holdings don't offer high dividend yields.
According to Blackrock, the current 12-month trailing dividend yield of the IVV ETF is just 1.11%.
However, the iShares S&P 500 ETF has delivered strong returns in the last 12 months thanks to capital growth. The underlying performance of stocks like Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms and Apple has been impressive — all increased by double-digit percentage terms over the past year.
The strength of the underlying holdings has helped the IVV ETF rise by 26% over the last 12 months, as shown in the chart above.
In contrast, the S&P/ASX 200 Index (ASX: XJO) has only climbed by 11% in the past year, so the US share market has significantly outperformed. However, past performance is not a guarantee of future performance, of course.
At the end of June 2024, the iShares S&P 500 ETF had a price/earnings (P/E) ratio of 27.3. This implies that the market is expecting strong earnings growth in the next couple of years to justify the current valuation.
