When considering a high-yield exchange traded fund (ETF), what are the most important characteristics to keep in mind?
Phillip Yockey, President of Tactival Analytics, says "quality, yield and safety" should be the biggest considerations. Michael Krause of AltaVista Research agrees but adds that it’s also important to analyze the underlying composition of these ETFs.
Billy Fisher for The Street says that while there are a high number of high-yield ETFs to choose from, some due diligence should be done in looking at the alternatives. Remember that the expense ratios are important because they take away from dividend payments.
Among the number of high-yield ETFs available are:
- Claymore/Zacks Yield Hog (CVY), up 0.14% year-to-date; 6.3% yield
- SPDR S&P Dividend (SDY), down 2.9% year-to-date; 3.9% yield
- iShares Dow Jones Select Dividend Index Fund (DVY), down 6.8% year-to-date; 4.2% yield
- WisdomTree High-Yielding Equity Fund (DHS), down 5.4% year-to-date; 4.6% yield
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.