We come full circle to the idea of income stocks. As with the utility sector ETF highlighted first, the broader idea of dividend stocks and income investments is very appealing right now. Investors are looking for safe havens that pay them even in tough times — and stable, cash-rich dividend stocks are the way to go.
What better way to tap into income than the WisdomTree Dividend ex-Financials (NYSE:DTN)? This fund invests in dividend payers but avoids financial stocks because of their toxic and uncertain balance sheets right now. The result is a 3% gain so far in 2011 and a 3.2% dividend yield. Not bad. There’s also the First Trust Morningstar Dividend Leader ETF (NYSE:FDL) with similar performance and yield.
The correlation to the market with these plays still is very strong because you are essentially buying the blue chips of the S&P 500 and Dow that pay decent dividends. That means the makeup is very similar — barring, of course, the ex-financials ETF that omits banks from its ranks.
However, the nice dividend yield and the more stable nature of these payers make dividend ETFs a good bedrock investment for most portfolios in these troubled times.
Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.