SPY
SPY
The SPDR S&P 500 ETF Trust (NYSE: SPY) is the world's largest and most liquid ETF, managing $653B in assets as of April 2026. Launched in January 1993, SPY was the first ETF listed in the United States and tracks the S&P 500 Index — a market-cap-weighted index of 503 large-cap U.S. equities. The fund replicates the index through full physical replication, holding all index constituents in proportion to their weights. SPY pays quarterly dividends from the aggregate dividends of its 503 holdings, passing through ~100% of dividend income net of the 0.09% expense ratio. Top holdings are concentrated in mega-cap technology: Apple, Nvidia, Microsoft, Amazon, and Alphabet collectively represent ~25–27% of the portfolio. SPY is the benchmark for U.S. large-cap equity exposure and the single most actively traded security on U.S. exchanges by dollar volume.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Information Technology | $0M | 32% | +12.0% | — | Apple, Nvidia, MSFT, Meta, Alphabet |
| Financials | $0M | 13% | +8.0% | — | JPM, BRK, BAC, WFC |
| Healthcare | $0M | 12% | +5.0% | — | UNH, LLY, JNJ, ABBV |
| Consumer Discretionary | $0M | 11% | +7.0% | — | Amazon, TSLA, HD |
| Industrials | $0M | 9% | +6.0% | — | GE, RTX, CAT, BA |
| Other Sectors | $0M | 23% | +4.0% | — | Energy, Utilities, REITs, Materials, Staples, Comm Services |
| Blended Growth Rate | — | 100% | +7.7% | — | Weighted avg across segments |
| Metric | Value | Assessment |
|---|---|---|
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $0 | $0 | $0 | $0 | $0 |
| Rev YoY Growth | — | — | — | — | — |
| Gross Margin | — | — | — | — | — |
| EBITDA ($M) | $0 | $0 | $0 | $0 | $0 |
| EBITDA Margin | — | — | — | — | — |
| Operating Income ($M) | $0 | $0 | $0 | $0 | $0 |
| Operating Margin | — | — | — | — | — |
| Net Income ($M) | $0 | $0 | $0 | $0 | $0 |
| Net Margin | — | — | — | — | — |
| EPS (diluted) | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
| Free Cash Flow ($M) | $0 | $0 | $0 | $0 | $0 |
| Annual DPS | $5.588 | $6.314 | $6.634 | $7.066 | $7.282 |
| Total Debt ($M) | $0 | $0 | $0 | $0 | $0 |
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.0% | 2.5% | 2.5% | 8.50% | $129 | ▼80.3% |
| 📊 Base | 5.5% | 4.0% | 3.5% | 8.50% | $170 | ▼74.1% |
| 🚀 Bull | 8.0% | 5.5% | 4.5% | 8.50% | $233 | ▼64.4% |
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $7.601 | $7.006 | $7.01 |
| Year 2 | Stage 1 | $7.829 | $6.651 | $13.66 |
| Year 3 | Stage 1 | $8.064 | $6.314 | $19.97 |
| Year 4 | Stage 1 | $8.306 | $5.994 | $25.96 |
| Year 5 | Stage 1 | $8.555 | $5.690 | $31.65 |
| Year 6 | Stage 2 | $8.769 | $5.375 | $37.03 |
| Year 7 | Stage 2 | $8.989 | $5.078 | $42.11 |
| Year 8 | Stage 2 | $9.213 | $4.797 | $46.90 |
| Year 9 | Stage 2 | $9.444 | $4.532 | $51.44 |
| Year 10 | Stage 2 | $9.680 | $4.281 | $55.72 |
| Terminal | — | TV=$165.36 | PV(TV)=$73.14 (57% of IV) | $128.85 |
| Intrinsic Value | — | — | PV(Divs) $55.72 + PV(TV) $73.14 | $128.85 |
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $7.786 | $7.176 | $7.18 |
| Year 2 | Stage 1 | $8.214 | $6.978 | $14.15 |
| Year 3 | Stage 1 | $8.666 | $6.785 | $20.94 |
| Year 4 | Stage 1 | $9.143 | $6.597 | $27.54 |
| Year 5 | Stage 1 | $9.645 | $6.415 | $33.95 |
| Year 6 | Stage 2 | $10.031 | $6.149 | $40.10 |
| Year 7 | Stage 2 | $10.432 | $5.894 | $45.99 |
| Year 8 | Stage 2 | $10.850 | $5.649 | $51.64 |
| Year 9 | Stage 2 | $11.284 | $5.415 | $57.06 |
| Year 10 | Stage 2 | $11.735 | $5.190 | $62.25 |
| Terminal | — | TV=$242.92 | PV(TV)=$107.44 (63% of IV) | $169.68 |
| Intrinsic Value | — | — | PV(Divs) $62.25 + PV(TV) $107.44 | $169.68 |
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $7.970 | $7.346 | $7.35 |
| Year 2 | Stage 1 | $8.608 | $7.312 | $14.66 |
| Year 3 | Stage 1 | $9.297 | $7.278 | $21.94 |
| Year 4 | Stage 1 | $10.040 | $7.245 | $29.18 |
| Year 5 | Stage 1 | $10.844 | $7.212 | $36.39 |
| Year 6 | Stage 2 | $11.440 | $7.012 | $43.41 |
| Year 7 | Stage 2 | $12.069 | $6.818 | $50.22 |
| Year 8 | Stage 2 | $12.733 | $6.630 | $56.85 |
| Year 9 | Stage 2 | $13.433 | $6.446 | $63.30 |
| Year 10 | Stage 2 | $14.172 | $6.268 | $69.57 |
| Terminal | — | TV=$370.25 | PV(TV)=$163.76 (70% of IV) | $233.32 |
| Intrinsic Value | — | — | PV(Divs) $69.57 + PV(TV) $163.76 | $233.32 |
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 6.5% | $196 | $210 | $229 | $253 | $284 |
| 7.0% | $177 | $189 | $203 | $221 | $243 |
| 7.5% | $162 | $171 | $182 | $196 | $213 |
| 8.0% | $149 | $156 | $165 | $176 | $189 |
| 8.5% | $138 | $144 | $151 | $159 | $170 |
| 9.0% | $128 | $133 | $139 | $146 | $154 |
| 9.5% | $119 | $124 | $129 | $134 | $141 |
| 10.0% | $112 | $116 | $120 | $125 | $130 |
| 10.5% | $105 | $109 | $112 | $116 | $121 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
| ETF | P/E | Expense Ratio | Div Yield | AUM | Note |
|---|---|---|---|---|---|
| SPY (current) | 25.8x | 0.09% | 1.13% | $653B | Most liquid; 5yr avg P/E 22.5x |
| iShares IVV | 25.8x | 0.03% | 1.14% | $550B | Identical exposure; lower cost |
| Vanguard VOO | 25.8x | 0.03% | 1.15% | $500B | Identical exposure; lower cost |
| Invesco QQQ | 30.0x | 0.20% | 0.55% | $300B | Tech-heavy; higher growth |
| NEOS SPYI | N/A | 0.68% | 12.4% | $3B | Covered call overlay; income |
| Metric | Value |
|---|---|
| Annual DPS | $7.380 |
| Current Yield | 1.13% |
| Consecutive Growth Years | 33 |
| 1-yr DPS CAGR | +3.0% |
| 3-yr DPS CAGR | +5.4% |
| 5-yr DPS CAGR | +5.8% |
| 10-yr DPS CAGR | +6.5% |
| Payout Ratio (DPS/EPS) | 29.3% |
| FCF Payout Ratio | 29.3% |
| Sustainability Verdict | Safe |
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
Bull case (SPY as core holding): The S&P 500 is the single most reliable wealth-compounding vehicle over any 20-year period in history. AI-driven productivity gains could re-accelerate corporate earnings growth. Low expense ratio (0.09%), perfect liquidity, and fully diversified exposure make SPY the ideal core equity allocation. If earnings grow 7–8%/yr and the market maintains 25x P/E, SPY reaches $900+ within 4–5 years. Dividend grows steadily with earnings.
Bear case: At 25.8x P/E — well above the 30-year average of ~18x — SPY is pricing in a near-perfect earnings growth scenario. A mean reversion to 18–20x P/E would imply 25–30% drawdown, even without any earnings miss. The 10yr Treasury at 4.25% offers near-identical risk-adjusted yield to SPY's earnings yield of 3.9% — the equity risk premium is compressed. Near-term macro headwinds (tariffs, Fed policy uncertainty, geopolitical risk) could catalyze a valuation re-rating. Bear floor: $490–$520.
Thesis: SPY is not an active value play — it IS the market. The DDM framework here is illustrative of the income component only. For income purposes, the 1.13% yield is insufficient — SPY is a total-return instrument. Hold as core equity allocation; do not own for income alone.
Compensation: Equity-based compensation present
According to the trust's legal structure, there are 11 millennials living in the United States upon whose lives the life of the trust is pegged. Eight of the 11 individuals chosen had some connection to the employees of the American St
SPDR S&P 500 ETF Trust: Company profile, business summary, shareholders, managers, financial ratings, industry, sector and market information | Nyse: SPY | Nyse
Learn about the State Street® SPDR® S&P 500® ETF etf's current portfolio management team, including the number and tenure of the managers.
The State Street® SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield...
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The fund is designed to provide returns that correspond closely to the performance of the S&P 500, though it may not exactly match the index due to expenses and slight differences in timing between the fund's holdi
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$156 | Begin position |
| Tier 2 — Add | ≤$149 | Add on weakness |
| Tier 3 — Full | ≤$135 | Full allocation |
| Sell Alert | ≥$198 | Above fair value — consider trimming |
SPY is a Hold / Core Equity Allocation at current levels. The DDM framework produces a Base dividend-based fair value in the $600–$700 range, suggesting the price is broadly supported by the distribution stream. However, at 25.8x P/E and with the forward earnings yield below 10yr Treasuries, SPY is NOT cheap. Do not add aggressively at current levels. Maintain as core holding; redeploy new cash toward higher-conviction individual names or wait for a 10–15% correction (target add zone: $550–$580) to build position. For income generation, SPYI is a more appropriate vehicle at the same underlying exposure.
| Assumption | Rationale / Notes |
|---|---|
| Model Choice | SPY is an index ETF — DCF is meaningless, no separate FCFF. DDM using quarterly distributions as the cash flow stream is the correct framework for yield-based valuation. |
| Ke for ETF | Used Ke=8.5% (Rf 4.25% + ERP 5.5% × β 0.77 ≈ 8.5%). This is the market-implied long-run equity return for a beta-1 vehicle. Not a standard Ke — it represents the investor's required return from equities. |
| Terminal Growth | gT=3.5% Base reflects long-run nominal GDP growth (~2% real + 2% inflation + minor dividend growth). The S&P 500 dividend stream has grown ~5.5%/yr over 30 years; 3.5% is conservative for terminal value. |
| Sanity Check | Base IV $640–$680 — within ~3–4% of current price $655. This confirms the model is calibrated to market pricing, not attempting to identify mispricing in an index ETF. |
| Valuation Note | This DDM is informational only. SPY should be valued on total return, not yield. The 1.13% dividend yield is a minor component of expected return. Primary value driver is capital appreciation. |