ETF Education Report: John Hancock Tax-Advantaged Dividend Income (HTD)

What this ETF is trying to do

The HTD ETF is an exchange-traded fund designed to provide dividend income. Based on its name, it focuses on tax-advantaged dividend income for its investors.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This only tracks how much the share price itself has changed.

• Total Return: This includes both the change in share price and the money paid out through distributions (dividends).

For HTD, the numbers show a difference between these two:

• Year-to-Date (YTD): The price return is approximately -3.30%, but the total return is +2.31%.

• One Year: The price return was approximately -6.04%, while the total return was +1.35%.

• Three Year: The price return was approximately 22.29%, while the total return was much higher at 54.68%.

To visualize the price change, we can look at an estimated price from roughly one year ago, which was $24.35. The current price is $22.88. This shows that while the share price has gone down over the last year, the total return (which includes dividends) remained positive.

Income and distribution explanation

HTD has a distribution yield of approximately 8.29%. This means the ETF pays out a significant amount of cash relative to its price. These distributions usually happen monthly, and over the last 12 months, there were 12 payouts.

It is important to remember that a high distribution yield does not mean you have earned that percentage as your total return. You must look at the "total return" figure to see how much you actually gained or lost including those payments.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases over time. StockValueFinder uses an "erosion-risk score" to measure this risk.

HTD has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and does not necessarily mean the fund's value has collapsed. There is no "severe erosion-risk flag" for this ETF.

Pros

• The ETF provides a high distribution yield of approximately 8.29%.

• The three-year total return has been strong at 54.68%.

Cons

• The share price has seen some decline, with a one-year price return of approximately -6.04%.

• There is a "mild" erosion-risk score of 75.

Beginner takeaway

When looking at HTD, notice that the share price has fallen recently, but the total return is higher because of the cash distributions. High yields can be helpful for income, but investors should always check if the share price is declining while those payments are being made.