With bond interest rates so low, many investors are looking for relatively safe places to park their cash while also earning a reasonable yield.
Many stock-based exchange traded funds specialize in dividend-paying companies and sectors, and they may appeal to investors with a defensive mindset amid the uncertainty in global credit markets.
The biggest and oldest ETF in this category is the $6.5 billion iShares Dow Jones U.S. Select Dividend (NYSEArca: DVY). The other largest ETFs here include Vanguard Dividend Appreciation (NYSEArca: VIG), SPDR S&P Dividend (NYSEArca: SDY), WisdomTree Large Cap Dividend (NYSEArca: DLN) and PowerShares International Dividend Achievers (NYSEArca: PID).
The iShares Dow Jones U.S. Select Dividend has a 12-month yield of 3.4%. These income ETFs invest in equities so they have stock-market risks different from bond funds.
Investors can also tap ETFs that track traditional dividend-paying sectors such as utilities and real estate investment trusts, although caution is warranted when stretching for yield. [REIT ETFs Look Expensive After Big Run: Strategist]