Best Dividend ETFs
February 16th, 2012 at 7:00am by Tom Lydon
Dividend exchange traded funds have become a key component holding for many investors, especially for those looking for that extra bit of cash on the side.
Dividend ETFs specifically pick out companies known for their dividend yields, but among the ETF universe, the markets may be further broken down into more focused sections, depending on style or investment strategies.
While the performance of the S&P 500 may be higher than most dividend ETFs so far this year, the payout ratios may begin to rise and make up the difference, reports David Wilson for Bloomberg. [Is There a Bubble in Dividend ETFs?]
The S&P 500 Dividend Aristocrats Index, comprised of companies that have raised dividends over the past 25 years or more, has gained 4.2% year-to-date, lagging the S&P 500′s increase.
According to Gina Martin Adams, strategist at Wells Fargo Securities, dividends equal 27% of S&P 500 earnings, the lowest levels in over 100 years. Looking ahead, dividends will be in greater demand as financial deleveraging is accompanied by slower earnings growth and an aging population that favors yields. [Can Dividend ETFs Sustain Their Performance?]
“Companies may be only just beginning to catch on to the fact that investors are keenly interested in dividend-paying stocks,” Martin Adams said in a report.
Additionally, potential investors need to be aware that President Barack Obama is calling for higher taxes on dividends. Households earning over $250,000 a year would have to pay almost 40% next year on dividends, compared to the top income rate of 35%, Reuters reports.
U.S. dividend ETFs include:
- First Trust Morningstar Dividend Leaders Index Fund (NYSEArca: FDL)
- First Trust Value Line Dividend Index Fund ETF (NYSEArca: FVD)
- iShares Dow Jones Select Dividend Index ETF (NYSEArca: DVY)
- iShares High Dividend Equity Fund (NYSEArca: HDV)
- PowerShares ETF Trust Dividend Achievers Portfolio (NYSEArca: PFM)
- PowerShares High Yield Equity Dividend Achievers Portfolio (NYSEArca: PEY)
- Schwab US Dividend Equity ETF (NYSEArca: SCHD)
- SPDR S&P Dividend Aristocrats ETF (NYSEArca: SDY)
- Russell Equity Income ETF (NYSEArca: EQIN)
- Vanguard Dividend Appreciation ETF (NYSEArca: VIG)
- Vanguard High Dividend Yield ETF (NYSEArca: VYM)
- WisdomTree Equity Income Fund (NYSEArca: DHS)
- WisdomTree Total Dividend Fund (NYSEArca: DTD)
- WisdomTree LargeCap Dividend Fund (NYSEArca: DLN)
- WisdomTree MidCap Dividend Fund (NYSEArca: DON)
- WisdomTree SmallCap Dividend Fund (NYSEArca: DES)
- WisdomTree Dividend ex-Financials Fund (NYSEArca: DTN)
Some international dividend ETFs:
- EGShares Low Volatility Emerging Markets Dividend ETF (NYSEArca: HILO)
- First Trust Dow Jones Global Select Dividend Index Fund (NYSEArca: FGD)
- First Trust STOXX Euro Select Dividend Index Fund (NYSEArca: FDD)
- Global X SuperDividend ETF (NYSEArca: SDIV)
- Guggenheim ABC High Dividend ETF (NYSEArca: ABCS)
- Guggenheim Multi-Asset Income ETF (NYSEArca: CVY)
- Guggenheim S&P Global Dividend Opportunities Index ETF (NYSEArca: LVL)
- Guggenheim International Multi-Asset Income ETF (NYSEArca: HGI)
- iShares Dow Jones International Select Dividend Income Fund (NYSEArca: IDV)
- PowerShares ETF Trust International Dividend Achievers Portfolio (NYSEArca: PID)
- SPDR S&P International Dividend Fund (NYSEArca: DWX)
- SPDR S&P Emerging Markets Dividend ETF (NYSEArca: EDIV)
- WisdomTree DEFA Fund (NYSEArca: DWM)
- WisdomTree DEFA Equity Income Fund (NYSEArca: DTH)
- WisdomTree Emerging Markets Equity Income Fund (NYSEArca: DEM)
- WisdomTree Emerging Markets SmallCap Dividend Fund (NYSEArca: DGS)
- WisdomTree Global Equity Income Fund (NYSEArca: DEW)
- WisdomTree Global ex-US Utility Fund (NYSEArca: DBU)
- WisdomTree International Dividend ex – Financials (NYSEArca: DOO)
- WisdomTree International LargeCap Dividend Fund (NYSEArca: DOL)
- WisdomTree International MidCap Dividend Fund (NYSEArca: DIM)
- WisdomTree International SmallCap Dividend Fund (NYSEArca: DLS)
- WisdomTree Australia Dividend Fund (NYSEArca: AUSE)
- WisdomTree Europe SmallCap Dividend Fund (NYSEArca: DFE)
- WisdomTree Japan SmallCap Dividend Fund (NYSEArca: DFJ)
- WisdomTree Middle East Dividend Fund (NYSEArca: GULF)
For more information on dividend payers, visit our dividend ETF category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.