Dividend ETFs Remain in Favor as Stocks Hit Record Highs
March 14th at 6:30am by Tom Lydon
The Dow Jones Industrial Index has hit new highs along with a rebound in U.S. equity markets, while specific dividend exchange traded funds remain in favor. Certain funds are maintaining streams of inflows and performance while others within the same sector have fallen to the sidelines, indicating investors are still keen on an income stream.
“Seemingly, investors continue to embrace these products as a way to achieve equity appreciation with a lower level of risk. It also doesn’t hurt that many are concerned about the Fed looming over the market, causing some to reconsider their bond holdings for the long term,” Eric Dutram wrote for Zacks.
Investors are still on the hunt for income as interest rates are low and the outlook for dividends is bullish based on the funds that continue to see inflows. The following dividend ETFs have continued to see inflows in 2013, suggesting more of an uptrend going into second quarter. [International Dividend ETFs for Income, Diversification]
The iShares Dow Jones EPAC Select Dividend Fund (NYSEArca: IDV) has a 5.3% yield, and has seen about $300 million in inflows this year. The Vanguard High Dividend Yield ETF (NYSEArca: VYM) has had about $470 million in inflows for 2013, with a 3.1% yield. Another dividend focused ETF that has recorded inflows in 2013 is the Vanguard Dividend Appreciation ETF (NYSEArca: VIG) has a yield of 2.2% and holds the record with about $1 billion in new assets in 2013, reports Dutram. [Breaking Down a Pair of Vanguard Dividend ETFs]
VIG is in the top 10 ETFs this year for raking in the highest amount of new assets. The fund focuses in on companies that increase their dividends annually rather than chasing the highest yield, the method VYM uses. Consumer staples and industrials dominate the holdings. VYM is dominated by consumer staples and healthcare. In comparison, IDV is concentrated in the financial sector and industrials, with about 2/3 of the portfolio focused on European companies.
WisdomTree Dividend ex-Financials Fund (NYSEArca: DTN) and the First Trust Morningstar Dividend Leaders Fund (NYSEArca: FDL) have experienced outflows in 2013, amid the rebound in U.S. stock markets. [Dividend ETFs and the Fiscal Cliff]
Tisha Guerrero 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.