Four new exchange-traded funds launched last week, and “income” is the name of the game.
Unsurprisingly, the HDIV — at a 0.33% expense ratio — is a veritable who’s who list of the income-investing crowd. The top 10 holdings:
- DuPont (NYSE:DD), 5.18%
- Verizon (NYSE:VZ), 5.12%
- AT&T (NYSE:T): 5.09%
- Bristol-Myers Squibb (NYSE:BMY), 5.09%
- ConocoPhillips (NYSE:COP), 4.98%
- Johnson & Johnson (NYSE:JNJ), 4.94%
- Merck & Co. (NYSE:MRK), 4.92%
- Ely Lilly (NYSE:LLY), 4.42%
- Southern Co. (NYSE:SO), 4.05%
- Kimberly-Clark (NYSE:KMB) 3.08%
The rest of the weightings are spread across another 65 stocks. While Southern Co. is the lone utility in the top 10, that sector is the heaviest weighted in HDIV, at 33.75%, with health care and consumer staples also covering significant ground. The overall dividend yield for the ETF is 4.38%.
Russell’s small-cap dividend ETF is much more spread out, at 150 holdings, with real estate investment trust Biomed Realty Trust (NYSE:BMR) the largest weighting at 2.23%. Financial stocks account for more than 55% of DIVS’ holdings, with utilities getting the next-biggest chunk at 12.8%. DIVS’ expense ratio is slightly higher than HDIV, at 0.38%, and it sports a 3.83% dividend yield.
Also harnessing high yields is the Yorkville High Income MLP (NYSE:YMLP) fund by Exchange Traded Concepts. YMLP invests in master limited partnerships, which throw off large quarterly distributions and are most often linked to the energy industry, such as Kinder Morgan Energy Partners LP (NYSE:KMP).
However, one caveat to note is YMLP’s tax risk. Like the ALPS Alerian MLP ETF (NYSE:AMLP), Yorkville High Income is treated like a C corporation, which must pay 35% in federal income taxes — and thus can hinder the ETF’s overall performance. Also a bit of a weight is YMLP’s 0.82% expense ratio.
State Street (NYSE:STT) also launched a new offering, the SPDR Barclays Capital Short Term High Yield Bond ETF (NYSE:SJNK), which is linked to an index that includes corporate bonds rated high-yield (also known as junk), with an average duration of around two years. SJNK has a 0.4% expense ratio.
Including last week’s addition to the ETF investing world, 77 new funds have been brought to market in 2012, but just six so far in March. Before this batch, the newest ETF to launch was the Wisdom Tree Emerging Markets Corporate Bond Fund (NASDAQ:EMCB). Exchange-traded fund assets in the U.S. have grown to almost $1.2 trillion across more than 1,200 funds.