We’ve been covering dividend exchange traded funds a lot lately because investors can’t seem to get enough information on these top-selling ETFs.
Some of the largest dividend ETFs by assets have seen impressive inflows in 2011.
Vanguard Dividend Appreciation ETF (NYSEArca: VIG), iShares DJ U.S. Select Dividend (NYSEArca: DVY) and SPDR S&P Dividend (NYSEArca: SDY) recorded year-to-date net cash inflows of $3.1 billion, $1.3 billion and $1.3 billion, respectively, through September, according to National Stock Exchange data.
These ETFs allow investors to buy a basket of companies with high dividends, with one trade. They have proven popular as interest rates remain low, although investors should remember stocks are more volatile than bonds.
Vanguard High Dividend Yield ETF (NYSEArca: VYM) isn’t one of the three largest dividend ETFs, but it features an expense ratio of 0.18%, one of the lowest in this sector. The ETF touts about $1.7 billion in assets under management. Over the past 12 months, the fund is up almost 11%. The fund has beat the S&P 500 over the past year, and continues to outperform the broad market at the moment. [A Quartet of Dividend ETFs]
Some of the stronger companies represented in the portfolio include Exxon Mobile Corp. (NYSE: XOM), which is the top holding, and Microsoft Corp. (NYSE: MSFT).
Assets are divided evenly among the rest of the holdings, and the companies that have added to the ETFs performance over the past year include General Electric (NYSE: GE), Altria (NYSE: MO) and Philip Morris (NYSE: PM). [Dividend ETFs in Focus as S&P 500 Yield Exceeds 10-Year]
The dividend yield on the S&P 500 is about equal to the yield on a 10-year Treasury bond, around 2.2%. About 89 companies within the S&P 500 are yielding more than the Treasury bonds, with about 50 of those yielding 4% or more. This paints an even more convincing picture for investors to consider dividend ETFs. [S&P’s Best Dividend ETF Picks]
Vanguard High Dividend Yield ETF
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own DVY.
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.