Dividend ETFs: Ignore At Your Own Expense

December 17th at 12:00pm by Tom Lydon

Although Treasury yields have been coming back up of late, there are still plenty of reasons to consider exposure to dividend exchange traded funds (ETFs).

Investors seem to being buying that notion, too. Despite feeling bullish that the markets will continue to improve over the next six months, dividend-paying stocks are still the investment of choice, according to a Forbes survey.

These are heady days for dividend investors.

  • Corporations are enjoying strong earnings – Q3 saw 80% of corporations beat their expectations. Can Q4 deliver similar results?
  • Corporations are sitting on loads of cash. At last count, it was at nearly $2 trillion. Sooner or later, they’ll have to loosen their grip.
  • Some corporations have boosted or implemented dividends, something that should give investors more confidence. Companies wouldn’t make this move if they weren’t certain that it would be sustainable. [How ETFs Reinvest Dividends.]
  • After getting beaten up over the last couple years, dividend ETFs present investors with an opportunity to earn some extra yield.
  • Although the average dividend yield on the S&P is 2.4% and the yield on 10-year Treasuries is 3.38%, dividend stocks come with potential price appreciation and/or dividend hikes, says Consumer Affairs.

Some of the highest-yielding dividend ETFs right now include WisdomTree Middle East Dividend (NYSEArca: GULF), which boasts the best yield of the lot at 9.5%, PowerShares Dividend Achievers (NYSEArca: PEY), yielding 6.6%, and First Trust DowJones STOXX Select Dividend 30 (NYSEArca: FDD), yielding 5.7%.

You can dig through the whole universe of dividend ETFs by dropping by the ETF Analyzer.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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