International dividend ETFs can provide decent yields and remove the need to do research on foreign stocks. Instead of trying to pick foreign holdings on limited information, there are funds that have pulled together some high-quality, dividend-paying companies that you can hold in a basket, thus spreading out the risk. (See why dividends have outperformed growth this year.)

Todd Shcriber for Investopedia reports that ETFs that hold high-quality stocks with reliable dividend histories that focused on sectors that are typically viewed as safe dividend bets. (Why dividend ETFs are good for tough times).

For more stories about dividends, visit our dividend category.

Among the many available are:

• WisdomTree International Utilities (NYSEArca: DBU): yield 9.89%; Utility funds can be a good bet no matter where you are, because there is always a need for the services utilities provide. These companies tend to pay out steady dividends that are predictable.



• WisdomTree International Large Cap Dividend (NYSEArca: DOL): yield 8.04%; This ETF does not focus on one sector, rather it tends toward large, high-quality dividend stocks. It is a thinly traded fund, but has nice performance. Countries ranging from China to Brazil are featured in this ETF, both hot spots.



• iShares S&P Global Telecommunications (NYSEArca: IXP): yield 5%; Telecom stocks are another sure play as they are indispensible and growing. This is not as international a play as the other two funds, as AT&T and Verizon are in the top 10 holdings. Nevertheless, the ETF contains quality names across the world.

The number of ETFs available in the market may be confusing, but there are so many choices that investors can customize their portfolios according to their personal preferences and strategy. The ultimate goal is usually the same (to make money), there are two primary categories investors fall into: those who use a fundamental strategy and those who prefer a sector strategy, explains Don Dion for TheStreet. We throw in a third strategy below, too.

Fundamental Strategy: Fundamental ETF portfolios are suitable for investors looking to take advantage of the cost efficiency and tax efficiency of ETFs over an extended time period. These portfolios are usually not traded very often and provide exposure to the broad market while meeting their needs for income.

Investors who find this strategy appealing often cite taxes as the primary lure.

• iShares Dow Jones Select Dividend Index (NYSEArca:DVY): up 4.8% year-to-date

• PowerShares QQQ (NYSEArca: QQQQ): up 42.9% year-to-date

Sector Strategy: A sector ETF strategy is designed to actively capture market trends. Some prefer  a momentum-based strategy to indicate the best times to enter and exit funds. ( The strategy you choose is just as important as the approach). These portfolios are considered active, as they are traded and monitored constantly.

• iShares iBoxx $ High Yield (NYSEArca: HYG): up 23.8% year-to-date

• PowerShares DB U.S. Dollar Bullish (NYSEArca: UDN): up 8.1% year-to-date

A Blend Strategy. We use trend following by monitoring the 200-day moving average in order to find those areas that are moving. By getting in and out of the market at set signals, you give yourself the opportunity to be in the markets for any potential long-term uptrend. The stop loss enables you to put a cap on your losses. The benefit of relying on market signals to determine where and when you invest also removes the “noise” that emotions can generate and cloud your judgment. Any ETF works with this strategy, whether it’s a broad-based, plain-vanilla fund or a more exotic, niche ETF. (How to get in on the rebound).

Always do some research on what you are implementing and consider the liquidity, underlying stocks and pricing taking place in the ETFs you choose.

For more stories about trend following, visit our trend following category.

According to Will McClatchy for ETFZone, overweighting or underweighting mid-caps coming out of a bear market can be a good play for an ETF portfolio, depending on the economic conditions, and mid-caps are relatively less volatile than small-caps.

There is also the chance that a larger company may acquire a mid-cap company, which would be to the benefit of mid-cap shareholders.

Stock-picking can be difficult; how does anyone know which small- or mid-cap will graduate to large-cap status? Mid-cap ETFs can give you a diversified play on the entire asset class.

Potential investors looking into mid-cap ETFs should know that the definition of “mid-cap” varies from different fund providers. In general, though, it’s a company with a market capitalization between $2 billion and $10 billion.

For more information on mid-caps, visit our mid-cap category.

Major mid-cap ETFs include:

• Vanguard Mid-Cap ETF (NYSEArca: VO)
• iShares S&P MidCap 400 (NYSEArca: IJH)
• iShares Russell Midcap ETF (NYSEArca: IWR)
• SPDR Dow Jones Wilshire Mid Cap ETF (NYSEArca: EMM)
• SPDR MidCap ETF (NYSEArca: MDY)

Additionally, there are mid-cap ETFs that target growth or value:

• iShares Morningstar Mid Core ETF(NYSEArca: JKG)
• iShares Morningstar Mid Growth ETF(NYSEArca: JKH)
• iShares Morningstar Mid Value ETF(NYSEArca: JKI)
• iShares Russell Midcap Growth ETF(NYSEArca: IWP)
• iShares Russell Midcap Value ETF(NYSEArca: IWS)
• iShares S&P MidCap 400 Growth ETF(NYSEArca: IJK)
• iShares S&P MidCap 400 Value ETF(NYSEArca: IJJ)
• Rydex ExpressShares S&P MidCap 400 Pure Growth ETF (NYSEArca: RFG)
• Rydex ExpressShares S&P MidCap 400 Pure Value ETF (NYSEArca: RFV)
• Vanguard Mid-Cap Growth ETF (NYSEArca: VOT)
• Vanguard Mid-Cap Value ETF (NYSEArca: VOE)
• SPDR Dow Jones Wilshire Mid Cap Growth ETF (NYSEArca: EMG)
• SPDR Dow Jones Wilshire Mid Cap Value ETF (NYSEArca: EMV)

Then, there are the leveraged ETFs that provide an extra kick to benchmark performance results. Investors should know the risks involved when trading leveraged funds. (Everything you need to know about leveraged and inverse ETFs).

• ProShares Ultra Russell MidCap Growth ETF(NYSEArca: UKW)
• ProShares Ultra Russell MidCap Value ETF(NYSEArca: UVU)
• ProShares UltraShort Russell MidCap Growth ETF(NYSEArca: SDK)
• ProShares UltraShort Russell MidCap Value ETF(NYSEArca: SJL)
• Rydex ExpressShares 2x S&P MidCap 400 ETF(NYSEArca: RMM)

And lastly, there are mid-cap ETFs that utilize financial ratios to beat popular indexes:

• RevenueShares Mid Cap ETF (NYSEArca: RWK)
• WisdomTree MidCap Dividend ETF(NYSEArca: DON)
• WisdomTree MidCap Earnings ETF(NYSEArca: EZM)

Max Chen contributed to this article.

Investors looking for dividend-paying stocks will encounter the argument that “growth” stocks may be better than those paying dividends, remarks John Jagerson for Learning Markets. (Read about how dividends can help).

Dividend-paying stocks, however, have usually outperformed major growth indexes as a result of lower volatility returns. For example, the Dow Jones Select Dividend Index has outperformed the S&P 500 and the Russell 2000 by almost 100% in the last 10 years.

Jagerson commented that an investor does not need to decide on a dividend-paying portfolio over a growth-oriented portfolio. A reasonable alternative may be a combination of the two.

You could take the time to scrounge up individual stocks that pay dividends, but you may also consider ETFs as an easy way to gain exposure to dividend-paying stocks. (Read about strategies to rebuild your portfolio).

For more information on dividends, visit our dividend category.

• SPDR S&P Dividend ETF (NYSEArca: SDY): up 16.4% year-to-date; yields 4.27%

• WisdomTree LargeCap Dividend (NYSEArca: DLN): up 15.8% year-to-date; yields 2.94%

• iShares Dow Jones Select Dividend Index (NYSEArca: DVY): up 7.1% year-to-date; yields 4.32%

Max Chen contributed to this article.

Traditionally, financial planners and advisors have recommended that one use their age as a benchmark to gauge how much risk should be in their portfolios.  However, Jan Alexander of Forbes states that times have changed and the rules of diversification and risk-taking have followed suit.

In order to mitigate some risks and maximize the performance of a portfolio, she offers several helpful strategies:

• Do what the Ivy League School Endowments do.  Stay diversified by allocating 15%-30% of a portfolio to the following five categories: U.S. stocks, foreign stocks, bonds, commodities and real estate investment trusts (REITs).

• Use ETFs. They can help you accomplish your goals of diversification. They also offer low costs, transparency, tax efficiency and intraday trading ability.

• The dividend strategy. Choose stocks and ETFs that pay dividends.  The reason behind this is that dividends don’t fluctuate like earnings do and it enables one to more accurately forecast the performance of a portfolio.

• Look at emerging markets. Many investors have already sought out Brazil, Russia, China and India, known as the BRIC nations, because of  their economic growth and prosperity.  A good way to access the BRICs is through the use of the iShares MSCI BRIC Index (NYSEArca: BKF), which is up 67.5% year-to-date.

• Check out short-term bonds. Aas the economy recovers, interest rates will increase and the value of a bond purchased today will lose value.  A good way to do this is through the iShares Barclays 1-3 Year Treasury Bond (NYSEArca: SHY), which is up 0.4% year-to-date and has a yield of 2.85%.

• Consider alternative assets, such as commodities and currencies. As emerging markets continue to prosper, raw materials and resources will continue to be in demand. Alternative asset classes are an essential part of a well-balanced portfolio.  A good way to grab exposure to the broad based commodity markets is through the iShares GSCI Commodity-Indexed Trust (NYSEArca: GSG), which is up 0.3% year-to-date.

In addition to considering these strategies, the most important strategy you can use is one that gets you into the markets in time for any potential long-term uptrend and has you out with a stop loss to protect yourself on the downside. You can read more about the strategy we use in The ETF Trend Following Playbook.

For more stories on strategy, visit our trend following category.

Kevin Grewal contributed to this article.

Most ETFs passively track indexes, and those indexes generally have a strategy as to how its components are weighted. “Weighting” refers to the way stocks are distributed within a portfolio, Ron Rowland for Money and Market explains. For example, in one index, a company might make up 10% of the overall portfolio while in another index that’s constructed differently, the same company could make up just 1% of the portfolio.

Providers of ETFs have developed alternative weighting schemes that can be useful, especially if there is reason to believe that certain companies are going to outperform others. Here is a rundown:

Equal weight: This is a simple approach – divide the money between all the stocks weighted within the index equally. If an index has 50 stocks, each one represents 2%.

• SPDR S&P Biotech (NYSEArca: XBI)
• SPDR S&P Semiconductor (NYSEArca: XSD)

Dividend & Earnings Weighted: WisdomTree is the master of this method. These are for income-loving investors who want to own companies that have a record of growing their dividends. The indexes are measured, or weighted, by  fundamental factors such as dividends and earnings. The provider says that this method can lead to better long-term results.

• WisdomTree India Earnings (NYSEArca: EPI)
• WisdomTree Dividend minus Financials (NYSEArca: DTN)

Revenue Weighted: Simply put, stocks within the index are weighted according to revenue. Over time, the results should yield good returns.

• RevenueShares Small Caps (NYSEArca: RWJ)

Fundamentally Weighted: A number of factors go into fundamental weighting, including book values, sales, dividends and cash flow.

• PowerShares FTSE RAFI US 1000 (NYSEArca: PRF)
• PowerShares FTSE RAFI Emerging Markets (NYSEArca: PXH)
  

For more stories about indexing, visit our indexing category.

Investors interested in dividend ETFs should watch out for large sector distributions, most notably sector exposure in financials, comments Roger Nusbaum for TheStreet. Having a fund with a high exposure to financials is fine, but it might not be such a good thing if other funds in a portfolio also include high financial exposure. It also may be exposure that you, personally, don’t want in your portfolio.

Long-term investment in dividends has its perks. The stock market has seen an average annual return of around 10% in the long run, and 40% of that return has been generated by dividends.

Since the latest financials-induced migraine, dividend funds have decreased weightings in financials or even eliminated them altogether.

iShares Dow Jones Select Dividend Index (NYSEArca: DVY): up 2.9% year-to-date; decreased its weight in financials to 14% down from its original 40%. The reason for the reduction is because some financial companies have either suspended or cut their dividends. Now the largest allocation is in utilities, at 24%, followed by industrials, at 20%, and consumer goods, at 17%.

PowerShares Intl Dividend Achievers (NYSEArca: PID): up 33.2% year-to-date, has 30% in financials compared to its original 41%. It still has a high weighting in financials because the five large Canadian banks in the fund have held up in the crisis and none had to cut dividends.

WisdomTree Dividend ex-Financials (NYSEArca: DTN): up 13.7% year-to-date; as its name states, this fund has no exposure to financials; its weightings are in utilities, 17.5%; consumer staples, 13%; telecommunications, 11.3% and industrials, 11%.

For more information on dividends, visit our dividend category.

Max Chen contributed to this article.

Stocks are still a ways off their 2007 highs, however, many investors  may find the comfort of dividend income enough to tide them over until the market recovers. Dave Kansas for The Wall Street Journal reports that there are other reasons for investing in dividend-paying companies other than the extra capital:

1. Companies that can maintain or even increase a dividend payout are showing their strength. Some companies have reduced or eliminated their dividends.
2. In the wake of various accounting scandals, a steady dividend is proof that a company is actually making the money it says it is making. There is nothing that accounting numbers can hide to fake a dividend payout.
3. Since bond yields are at low levels, dividend yields are now competitive. Most economists expect bond yields to stay depressed for the time being, too.

Among the stellar companies that have managed to up their payout rather than decrease them include General Mills (GIS), Colgate-Palmolive (CL) and Lockheed Martin (LMT), to name a few.

When searching for a good dividend-paying company, Kansas suggests a couple things:

• The dividend yield of a major average, such as the Dow Jones Industrial Average, is a good starting point for deciding which dividend-paying company to add to your portfolio. You would eye stocks that outpace the dividend yield of the average.
• Watch for stocks that pay a good yield, which is calculated by dividing the annual dividend by the share price.
• We’d also add here that investors can look at dividend-paying ETFs. The providers are constantly in search of these high-quality stocks, saving investors time and giving them diversification. Some dividend-paying ETFs (though there are many, many others):

• SPDR S&P Dividend (SDY): up 6.3% year-to-date; yields 5.3%

• First Trust Morningstar Dividend Leaders (FDL): up .40% year-to-date; yields 5.1%

• WisdomTree Dividend ex-Financials (DTN): up 8.5% year-to-date; yields 5%

Keep in mind that there are many dividend-paying stocks nestled into other ETFs, as well.

For more stories about dividends, visit our dividend category.

ETF investing has become a popular way of getting into the market with less risk than a single stock, especially when times are still uncertain. Fear not – there are ways for skeptics to invest with a “recession-proof,” or defensive, strategy by looking at certain industries.

The Motley Fool suggests that a global approach can be a wise approach, since two-thirds of the global market cap resides outside the United States. Foreign companies and markets are still affected by the U.S. economy, however, the diversification a global investment brings can buffer the losses.

• iShares MSCI EAFE (EFA): up 15.9% year-to-date

EFA has more than 2,000 holdings, and companies span the globe, ensuring maximum diversification.

Another place investors may turn to for a defensive approach is dividend-paying stocks. The following fund offers about 100 dividend-paying companies. Some are in defensive industries, such as consumer staples, pharmaceuticals and utilities, although some are also in the beleaguered financial sector.

• iShares Dow Jones Select Dividend Index (DVY): down 2.9% year-to-date; yields 5.5%

Consumer staples can also be an option. While consumers might delay buying a new television or upgrading that clunky, slow computer, few consumers would put off buying toothpaste, toilet paper and certain basic foods. Consumer staples ETFs can be an appealing option for investors who want to capitalize on this notion.

• Consumer Staples Select Sector SPDR (XLP): up 2.7% year-to-date

Remember that having a strategy, no matter the market condition, is necessary. We follow the 200-day moving average. By watching market trends and following through with your strategy in place, losses will be kept to a minimum and emotions will be left out of the equation.

For more stories about dividend and global ETFs, visit our dividend and global ETF categories.

Investors can use ETFs for a number of reasons, including to capture capital appreciation and above-average dividends, writes Matthew D. McCall for Seeking Alpha. McCall provides a few ETFs he believes will have the right amount of performance and dividend yields. We should note, too, that this is by no means a complete list of all high-yielding ETFs with good performance – there are many available, so be sure to look around.

SPDR Barclays Capital High Yield Bond (JNK), currently up 23.8% year-to-date, follows corporate high-yield bonds, otherwise known as junk. The ETF also pays out a monthly dividend that comes out to an annual yield of 13%. When the economy goes back to normal, undervalued risky assets could begin to attract more attention.

iShares S&P U.S. Preferred Stock Index (PFF), currently up 27.4% year-to-date, tracks preferred shares of companies, primarily in the financial sector. Annual dividend yield is 11%. The ETF is a good way to tamp down some risk that comes with including the financial sector in an investment portfolio.

Market Vectors High-Yield Muni ETF (HYD), currently up 7.1% in the last three months. HYD is a relatively new ETF that invests mainly in high yield municipal bonds. But around 25% is in investment-grade bonds. HYD has a 30-day SEC yield of 7.16%, which is better than the taxable bonds. Those in the 28% tax bracket will have tax-equivalent yield of 9.94%, and those in the 35% tax bracket will have as much as 11.02%.

It should be noted that HYD is ideal for a taxable account and people in a high tax bracket. JNK and PFF are better for tax-deferred accounts, McCall says.

Always be sure to watch the trend lines first to find areas that have entered into a potential long-term uptrend. Then explore the characteristics of the funds, including volume, assets and yield.

Max Chen contributed to this article.