When market morale is low, dividend-based exchange traded funds (ETFs) tend to offer some relief because they generally give investors dividends regularly. They also tend to be more financially sturdy than nondividend payers because they have the extra cash to pay the shareholders. One ETF provider that offers dividend-based ETFs is WisdomTree. Some other dividend-based ETFs to watch, according to Sonya Morris for Morningstar, include:
- PowerShares High Growth Rate Dividend Achievers (PHJ) – On average, this ETF has a record of growing earnings and cash flow of more than 10% per year. It follows the Mergent Dividend Achievers Index with the highest 10-year annual dividend growth rate. It ranks the 100 stocks within the index by market capitalization.
- Vanguard Dividend Appreciation ETF (VIG) – This ETF also follows the Mergent Dividend Achievers Index however it aims to identify and eliminate those companies that might have trouble increasing their dividends in the future. It’s sector weightings are similar to the S&P 500’s.
- WisdomTree Large Cap Dividend (DLN) – This ETF tracks the largest 300 dividend payers and ranks them by market capitalization. Unlike some of the other dividend ETFs, it does not screen for companies that have increased dividends over time.
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.