Dividend focused exchange traded funds (ETFs) specialize in stocks that payout extra income to shareholders. Rob Wherry for SmartMoney.com points out one of the latest trends is investing in dividend-paying stocks, mostly due to legislation introduced four years ago. The Jobs and Growth Tax Relief Reconciliation Act cut the tax rate on qualified dividends 15% from up to 38.6%. ETF providers who offer dividend focused ETFs include WisdomTree, Barclays, PowerShares, State Street and Vanguard.
The iShares Dow Jones Select Dividend Index (DVY) has an annual gain of 16% over the last three years. Some of the high dividend-paying companies in the ETF include, AT&T (T), Bank of America (BAC), and Altria (MO). One of the broadest ETFs available is WisdomTree Total Dividend (DTD). It holds 770 stocks such as Exxon Mobil (XOM), General Electric (GE) and Citigroup (C).
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