that pay monthly dividends is not a difficult task.
Well, it is not that difficult if an investor is looking at
any number of bond ETFs or those funds that track
, among other asset classes.
However, despite the rising number of equity-based dividend
ETFs, the number of funds that hold stocks and deliver monthly
payouts is paltry compared to ETFs tracking bonds, preferreds and
other assets known for 12-times-a-year dividends.
The good news is there are some equity-based ETFs that pay
monthly dividends. The better news is this number is rising as
well. In November, WisdomTree (NASDAQ:
) announced it was moving four of its dividend funds to monthly
payouts, bringing the number of ETFs issued by the firm
with monthly payouts to six
It is not a stretch to say that many income investors would
prefer 12 payouts per year over once, twice or four times. Not
surprisingly, investors will also want to know if there is an
advantage to owning monthly dividend ETFs compared to traditional
fare when it comes to overall returns. What follows are a few
examples aimed at discovering if monthly dividend stock ETFs are
PowerShares High Yield Equity Dividend Achievers Portfolio
) Somewhat overlooked in the dividend ETF conversation, the
PowerShares High Yield Equity Dividend Achievers Portfolio has
been around for a while. PEY debuted in late 2004 and now has
almost $293 million in assets under management. This ETF also
shares something in common with some of its larger dividend ETF
That trait is using a selection methodology that centers
around length of a constituent's dividend increase streak. As is
the case with the Vanguard Dividend Appreciation ETF (NYSE:
), PEY's holdings must have dividend increase streaks
least a decade
to be eligible for inclusion.
Beyond the fact that PEY pays a monthly dividend and VIG pays
quarterly, there are significant differences between the two. For
example, PEY is home to 50 stocks, about a third of the size of
VIG's roster. The PowerShares offering
also allocates over 46 percent of its weight to
. Importantly, PEY has a trailing 12-month yield of almost 4.1
percent compared to 2.2 percent for VIG.
Over time, PEY has delivered the goods for investors.
Including paid dividends, the ETF is up nearly 12 percent in the
past year, 24.4 percent over the past two years and nearly 48
percent over the past three years.
Global X SuperDividend ETF (NYSE:
) A mistake that has previously been made is the comparison of
the Global X SuperDividend ETF to U.S.-focused dividend funds.
Given that U.S. stocks only account for
percent of SDIV's weight, those comparisons are off-base
Using an equal-weight approach that tracks 100 stocks that
rank among the world's highest dividend payers, SDIV has become
one of the fastest-growing dividend ETFs on the market today. In
August, the ETF
passed the $100 million in AUM mark
. Today, the fund has over $355.2 million in assets.
While SDIV does hold some U.S. stocks, a fair comparison can
be made against the iShares Dow Jones International Select
Dividend Index Fund (NYSE:
). Beyond SDIV's monthly dividend and IDV's quarterly payout,
perhaps the comparison is not all that fair.
For example, SDIV has a 30-day SEC yield of about seven
percent compared to 4.28 percent for IDV. Over the past year,
SDIV has returned 10.4 percent compared to 9.9 percent for IDV.
That difference may not sound large, and some investors might be
apt to pick IDV because of its lower fees (0.5 percent per year
compared to 0.58 percent for SDIV). However, IDV is far more
volatile than SDIV. Over the past year,
SDIV's volatility is 400 basis less than IDV's
WisdomTree Total Dividend Fund (NYSE:
) The WisdomTree Total Dividend Fund migrated to the monthly
dividend plan in late November, so the data set for how that is
affecting the fund is still small. DTD, which is home to more
than 900 stocks, is a departure from the dividend increase streak
Rather, this ETF's index is weighted "to reflect the
proportionate share of the aggregate cash dividends each
component company is projected to pay in the coming year, based
on the most recently declared dividend per share,"
according to the issuer
In other words, the largest U.S. dividend payers in dollar
terms occupy the top spots in this ETF. Think AT&T (NYSE:
), Exxon Mobil (NYSE:
), and yes, even Apple (NASDAQ:
Arguably it is DTD's screening methodology more than its
monthly payouts that impact the ETF's returns. That said, DTD has
outperformed comparable rivals such as VIG and the iShares High
Dividend Equity Fund (NYSE:
) over the past three months.
For more on ETFs, click
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