It's a big day for the iShares S&P 500 ETF (ASX: IVV) this Wednesday. Not that you'd know it from this exchange-traded fund (ETF)'s unit price. The S&P 500 ETF closed at $38.09 per unit yesterday but is currently going for $38.28 at the time of writing, up 0.50% for the day.
This is rather unusual for an ETF that has just traded ex-distribution.
Yes, the iShares S&P 500 ETF is set to pay out its latest dividend distribution to investors on 5 January next year. But for a company or an ETF to pay out a dividend or distribution, it must first set an ex-dividend (or ex-distribution) date. This is the day that divides who gets the latest dividend and who doesn't.
Any investor who owned units of the iShares S&P 500 ETF as of yesterday is eligible to receive the 5 January distribution of 12.63 cents per share. Any investor who buys them from today onwards is ineligible.
Normally, this ex-distribution date would result in a fall in share price, reflecting the loss of value of this distribution for new unitholders. But that doesn't seem to be happening today.
Perhaps the rise of the S&P 500 Index (SP: .INX) itself overnight (up 0.1%), as well as currency fluctuations, were enough to keep the iShares S&P 500 ETF in the green this Wednesday.
iShares S&P 500 ETF doles out latest quarterly dividend
The iShares S&P 500 ETF is a rather unusual ASX investment because it pays out a dividend distribution every quarter, rather than every six months, which is the norm here on the ASX. This is probably due to the fact that this ETF tracks the American S&P 500 Index. The S&P 500 is the flagship index of the US markets.
It tracks 500 of the largest listed companies in America. These are dominated by the tech giants like Apple, Alphabet and Amazon. But you'll find most of the US' famous names here too, like Coca-Cola Co, Visa and McDonald's.
In the US, quarterly dividends are the norm, with most companies forking out four dividends per year. As such, it's easy to see why the iShares S&P 500 ETF follows this pattern.
This latest dividend distribution brings this ETF's trailing dividend distribution yield to 1.4%. The iShares S&P 500 ETF has delivered an average return of 18.27% per annum over the past ten years.
