Dividend stocks and exchange traded funds (ETFs) have rapidly been growing in appeal, and one analyst recently showed just how much that’s true.
Investors have been pushed further and further out the risk spectrum and the Federal Reserve has kept interest rates stuck at zero. In turn, investors have been seeing other sources of income. [Inflation Or Deflation; ETFs For Both.]
Matt Phillips for The Wall Street Journal highlights a report from a Goldman Sachs analyst showing how much this is true: equity income fund inflows (including ETFs) have totaled $6 billion year-to-date. [How to Find High-Yield ETFs.]
Matt Phillips for The Wall Street Journal also says that one note of caution to dividend-hungry investors on the prowl for fat payouts is to be wary of high dividend yields on stocks that are declining in price. “A high dividend yield by itself may be misleading. The high yield of a firm with a falling stock price may reflect an unsustainably high dividend,” Goldman analysts wrote.
Below is a sample of dividend ETFs; you can find all dividend ETFs by looking at the ETF Analyzer, where you can sort by yield to find the highest-paying funds:
- First Trust Morningstar Dividend Leaders (NYSEArca: FDL): Yields 4.38% and includes AT&T, Chevron and Verizon in its top holdings.
- WisdomTree Dividend ex-Financials (NYSEArca: DTN): Yields 4.01% and includes Qwest Communications and Altria Group in its top holdings.
- iShares Dow Jones Select Dividend Index (NYSEArca: DVY): Yields 3.79% and includes Lorillard Inc., Entergy Corporation and Chevron in its top holdings.
Tisha Guerrero contributed to this article.
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.