Dividend-focused ETFs have been gaining immense popularity and
are riding higher this month on investors' drive for higher income.
This is especially true as interest rates remain at lower levels
despite the fact that the Fed is curtailing its monetary stimulus
and bond yields are close to their all-time lows.
Additionally, the latest comments from the Fed Chairperson - Janet
Yellen - are fueling a rally in dividend funds. Janet Yellen has
again committed to keep short-term interest rates near zero levels
for a considerable period of time to support the gradually
Further, the most popular trading proverb 'sell in May and go away'
has boosted the demand for dividend-paying stocks. This is because
most of the investors believe in this old saying and sell their
stocks in May to avoid the seasonal decline in the equity markets
during the summer months (from May end to early September). As a
result, investors duly turned their focus on dividend paying stocks
Sell in May and Go Away with These Inverse ETFs
If this wasn't enough, investors should note that most of the
dividend paying companies are stable and mature with solid cash
flows that provide greater stability and safety in a volatile
environment. Though the U.S. market is hitting new highs, dumping
of growth and momentum stocks and growing tensions in Ukraine
remain concerns for the stock market.
In such a scenario, the companies that pay dividends generally act
as a hedge against economic uncertainty and most of the dividend
ETFs are climbing, reaching new highs this month. Notably,
dividends accounted for more than 40% of total market returns over
a long time horizon (say over the past 80 years).
Below, we have highlighted some dividend ETFs for those investors
seeking both stability and higher income. These funds are hitting
all-time highs and have a potential to move higher in the coming
months as well (read:
3 ETFs Hitting All-time Highs in Rocky Market
ALPS Sector Dividend Dogs ETF (
This fund applies the 'Dogs of the Dow Theory' on a
sector-by-sector basis using the S&P 500. This could be easily
done by selecting five highest yielding securities in each of the
10 GICS sectors and equally weighing them. These higher yielding
stocks will appreciate in order to bring their yields in line with
the market, potentially leading to outsized gains.
This approach results in a portfolio of 51 stocks with each
security accounting for 2.6% of total assets. The fund focuses on
yield in the large cap market while giving investors roughly equal
exposure to all sectors. SDOG has amassed $664 million in its asset
base while trades in volume of more than 105,000 shares. It charges
40 bps in annual fees and has a 30-day SEC yield of 3.56%.
The ETF hit its all-time high of $36.31 per share in yesterday's
trading session, representing a gain of about 5.2% over the past
Vanguard High Dividend Yield ETF (
This large cap centric fund provides exposure to the high yielding
by tracking the FTSE High Dividend Yield Index. The ETF is one of
the largest and popular choices in the dividend ETF space with AUM
of over $7.9 billion and average volume of around 549,000 shares.
Expense ratio came in at 10 bps (read:
3 Excellent Dividend ETFs for Growth and Income
Holding 391 securities, the product is concentrated on the top two
firms - Apple (
) and Exxon Mobil (
) - making up for more than 5% share each while other security
holds less than 4% of assets. In terms of sector, the fund is
widely spread out with technology, consumer goods, financials,
industrials, health care and oil & gas taking double-digit
exposure in the basket.
VYM hit its fresh high of $64.74 per share yesterday and has moved
higher by about 4.6% in the trailing one-month period. The ETF
yields 3.00% in 30-day SEC yield and has a Zacks Rank of 2 or 'Buy'
rating with a Medium risk outlook.
Vanguard Dividend Appreciation ETF (
This is the largest and most popular ETF in the dividend space with
AUM of $19.4 billion and average daily volume of about 940,000
shares. The fund follows the NASDAQ US Dividend Achievers Select
Index, which is composed of high quality stocks that have a record
of increasing dividends for at least 10 consecutive years.
The fund holds 164 securities, which are pretty spread across
various securities as none holds more than 4.1% of total assets.
International Business Machines (
), Wal-Mart (
) and Exxon Mobil are the top three elements in the basket.
However, the ETF is skewed toward industrials at 23.5% while
consumer goods, consumer services and technology round off to the
top four (read:
Manufacturing Boom Will Benefit These 3 Industrial
The product charges 10 bps in annual fees while its 30-day SEC
yield comes at 2.02%. This fund also reached its all-time high of
$77.17 per share yesterday, adding about 4.4% over the past one
month. It has a Zacks Rank of 2 with a Medium risk outlook.
WisdomTree LargeCap Dividend Fund (
This ETF provides exposure to the large cap segment of the U.S.
dividend paying stocks. It tracks the WisdomTree LargeCap Dividend
Index, which is dividend weighted annually to reflect proportional
share of cash dividend that each comapny is expected to pay in the
coming year. The fund has been able to manage assets of $1.8
million and trades in good volume of 86,000 shares a day on
average. Expense ratio came in at 0.28% (see:
all the Large Cap ETFs here
With less than 300 stocks in its basket, the product is widely
diversified across each component as none of these holds more than
3.63% of assets. Top three holdings include AAPL, XOM and Microsoft
). From a sector look too, the fund is well spread out including
information technology (16.06%), consumer staples (14.90%),
financials (13.44%), health care (11.53%) and energy (10.99%).
The fund has a 30-day SEC dividend yield of 2.45% and was up 4.2%
over the past month. DLN made a fresh high of $69.19 per share
yesterday and has a Zacks Rank of 2 with a Medium risk outlook.
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WISDMTR-LC DIV (DLN): ETF Research Reports
ALPS-SEC DV DOG (SDOG): ETF Research Reports
VANGD-DIV APPRC (VIG): ETF Research Reports
VANGD-HI DV YLD (VYM): ETF Research Reports
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