ETF Education Report: John Hancock Premium Dividend Fund (PDT)

What this ETF is trying to do

The John Hancock Premium Dividend Fund (PDT) is an Exchange Traded Fund (ETF). While the specific investment strategy isn't detailed in the data, the name suggests it focuses on dividend-paying assets.

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 any cash distributions (dividends) paid out to investors.

For PDT, the numbers show different results depending on how you measure them:

• Year-to-Date (YTD): The price return is approximately -4.49%, but the total return is +1.30%.

• One Year: The price return was approximately -9.21%, while the total return was approximately -1.85%.

• Three Years: The price return was +20.94%, and the total return was much higher at +54.17%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $13.36, and the current price is $12.13.

Income and distribution explanation

This ETF has a distribution yield of approximately 8.31%. This means the fund pays out a significant amount of cash relative to its share price. These distributions usually happen monthly, with 12 payments made over the last year.

It is important to remember that a high distribution yield does not guarantee you will earn that same percentage as a total return. As seen in the one-year data, even with a high yield, the total return can still be negative if the share price drops significantly.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling market price is not the same thing as NAV erosion, investors often watch for it.

The fund has an erosion-risk score of 75, which is labeled as "mild price erosion." There is no severe erosion-risk flag for this ETF.

Pros

• The fund has a history of strong three-year total returns (+54.17%).

• It provides a relatively high distribution yield of approximately 8.31%.

Cons

• The one-year price return has been negative (-9.21%).

• The fund shows a "mild" erosion-risk score.

Beginner takeaway

When looking at dividend ETFs like PDT, always look at the total return rather than just the yield or the price. The yield tells you how much cash you might receive, but the total return tells you how your entire investment is actually performing after both price changes and cash payments are combined.