Income investors that have sought out alternatives to traditional dividend stocks and fixed income have largely been rewarded this year. Asset classes such as MLPs, REITs and preferred stocks offer attractive qualities — namely, their combination of high yields and non-correlated returns.
Most investors tend to flock to the oldest and largest dividend ETFs in these respective categories. That’s understandable: After all, these funds are well-known and have been used successfully in the past or they represent the most diversified mix of underlying securities.
Plus, in many cases, these funds also are the most heavily traded, which provides excellent liquidity and execution when buying or selling.
However, in researching these areas I came across several smaller dividend ETFs that have surpassed their more established peers in 2014. I think they warrant a second look if you are considering alternative income sources.