Four High-Yield Dividend ETF Options
April 17th 2012 at 6:00am by Tom Lydon
As witnessed last year, dividend paying exchange traded funds offer investors the opportunity to receive additional cash on the side while they wait out any market condition. Still, if you want high-yield dividend picks, an investor will have to look beyond the plain vanilla dividend stocks.
Trang Ho, for Investor’s Business Daily, outlines four nonleveraged ETFs with yields over 10% that are trading above their 200-day moving average and show less volatility as compared to the S&P 500:
- iShares FTSE NAREIT Mortgage Plus Capped Index Fund (NYSEArca: REM) follows 28 real estate investment trusts, or REITs, that are related to residential and commercial real estate, mortgage finance and savings. It should be noted that the fund holdings are top heavy, with Annaly Capital Management (NYSE: NLY) and American Capital Agency (NYSE: AGNC) each taking up 20% of overall assets. Nevertheless, these companies stand to benefit from rising long-term interest rates in the future. REM has an expense ratio of 0.48% and a 11.93% 12-month yield. [Three Dividend ETFs for Investors Aiming High]
- PowerShares KBW High Dividend Yield Financial Portfolio Fund (NYSEArca: KBWD) tracks 36 stocks engaged in banking, insurance, financial services and REITs. All the holdings are relatively spread out, with the largest, AGNC, accounting for 6.0% of the fund. KBWD has an expense ratio of 1.32% and a 12-month yield of 10.54%
- Market Vectors Mortgage REIT Income ETF (NYSEArca: MORT) tries to reflect the performance of 25 REITs-related companies. The majority of the fund’s holdings overlap with REM’s holdings, with NLY at 20.3% of the fund’s holdings, AGNC at 10.7% and the rest at around 5%. MORT has an expense ratio of 0.4% and a 10.22% yield.
- PowerShares S&P 500 Buy Write Index (NYSEArca: PBP) tracks stocks in the S&P 500 Index and sells call options on the holds. Call options are contracts a buyer pays a premium for that allows them to buy a stock at a given price on a given date, up to the contract’s expiration. If the strike price is not met before expiration, the seller keeps the premium and rolls the contracts forward to the next month. PBP has an expense ratio of 0.75% and a 10.17% 12-month yield.
For more information on dividend producing funds, visit our dividend ETFs 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. 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.