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5 ETFs With Fat Dividend Yields

By Jeff Reeves, Executive Editor of InvestorPlace.com

http://invstplc.com/1fsVgKx

ETFs Have Become Much More Diverse

Making Money
Source: Via iStock

High Yield ETFs

When looking for high dividend yields, many investors steer right for utility stocks. From telecom dividend plays like AT&T (NYSE: T) and Verizon (NYSE: VZ) to conventional electric utilities like Duke Energy (NYSE: DUK) and Exelon (NYSE: EXC), there are a number of high-yield stocks out there that return 4% or 5% via dividends.

But if you’re looking for some diversification in addition to yields, you may want to consider another route. The number of exchange-traded funds and mutual fund investments has exploded in the past few years, covering just about every geographic region and market sector you can think of. That includes dividend stocks and income investments.

So if you’re looking for yield but want to rely on a diverse “basket” of investments via mutual funds or exchange-traded funds, consider these five exchange-traded funds with plump dividend yields.

#1 – iShares Dow Dividend ETF

Wall Street

High Yield ETFs

Based on its Sept. 29 distribution of 42.167 cents, the iShares Dow Jones Select Dividend Index  ETF (NYSE: DVY) has an annualized payout of 3.5% at current valuations.

Top holdings include tobacco giant Lorillard (NYSE: LO), telecom CenturyLink (NYSE: CTL) and energy giant Chevron (NYSE: CVX).

The DVY fund is up about 8% so far in 2010, slightly ahead of the 5% gain by the S&P 500 index.

#2 – iShares International Dividend ETF

International

High Yield ETFs

Based on its latest quarterly distribution on Sept. 29 of 36.408 cents, the Dow Jones International Select Dividend Index Fund (NYSE: IDV) has an annualized payout of 4.4% at current valuations.

Top holdings include Asian motorbike giant Jardine Cycle and Carriage (PINK: JCYGY), South American utility Enersis (NYSE: ENI) and the Commonwealth Bank of Australia.

The IDV fund has underperformed the market year-to-date, with gains of just a few percentage points in 2011, but it’s worth noting that the ETF has soared 26% since July 1.

#3 – SPDR S&P Dividend ETF

Market Chart

High Yield ETFs

Based on its latest monthly distribution on Nov. 9 of 22.7378 cents, the SPDR S&P Dividend ETF (NYSE: SDY) has an annualized payout of 5.3% at current valuations.

Top holdings include CenturyLink (NYSE: CTL), mail servicer Pitney Bowes (NYSE: PBI) and Cincinnati Financial (NASDAQ: CINF).

The SDY fund has nearly doubled the market’s performance year-to-date, with returns of over 9% while the S&P 500 index has added about 5%.

#4 – WisdomTree Ex-Financials Dividend ETF

money investment

High Yield ETFs

Based on its latest quarterly distribution on Sept. 24 of 31.24 cents, the WisdomTree Dividend Ex-Financials Fund (NYSE: DTD) has an annualized payout of 2.7% at current valuations.

As the name implies, the ETF avoids financial holdings and as a result, its top positions include telecoms Qwest Communications (NYSE: Q) and CenturyLink (NYSE: CTL), plus tobacco giant Altria (NYSE: MO).

The DTD fund has slightly outperformed the market so far in 2010, with gains of about 7% on the year so far.

#5 – WisdomTree SmallCap Dividend ETF

Small Cap Investments

High Yield ETFs

Based on its latest quarterly distribution on Sept. 24 of 38.202 cents, the WisdomTree SmallCap Dividend Fund (NYSE: DES) has an annualized payout of 3.5% at current valuations.

Top holdings include Ares Capital (NASDAQ: ARCC) and Vector Group (NYSE: VGR), and, strangely enough, the WisdomTree MidCap Dividend Fund (NYSE: DON) as well.

However strange this may seem, it appears to be working because the exchange-traded fund is up 13% year-to-date in 2010, nearly three times the broader market.

Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks or funds named here. Follow him on Twitter at http://twitter.com/JeffReevesIP.


Article printed from InvestorPlace Media, https://investorplace.com/2010/11/high-yield-etfs/.

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