Many investors are exploring dividend exchange traded funds as a way to play defense in their stock portfolios and earn yield in a low-interest-rate environment for bonds.

What some investors may not realize, however, is that there are plenty of dividend-focused ETFs trading that don’t have the “dividend” label. [Dividend ETFs See Performance Diverge on Sector Allocations]

The trick to finding the dividend paying funds is to look at the what the fund holds. Dan Caplinger for The Motley Fool points out some not-so-obvious dividend-paying ETFs:

  • iShares FTSE NAREIT Mortgage plus (NYSEArca: REM) The REIT sector is a good place to find yields. The ETF has a SEC yield of 12.7%.
  • ALPS Alerian MLP (NYSEArca: AMLP) This fund pays a 6.5% 12-month yield, with the focus on natural resources and energy. Master Limited Partnerships are becoming a popular place to fund high yields, according to the Motley Fool report. [MLPs Recover After Steep Drop]
  • PowerShares CEF Income Composite (NYSEArca: PCEF) This ETF of closed-end funds yielded 9% over the past 12 months.
  • iShares iBoxx High Yield Corporate bond (NYSEArca: HYG) Interest rates on bonds can be much better than dividend yields on stocks. The Feds have kept rates low, so the 10-year Treasury yield is lower than that of dividend yield of the S&P 500. [High Yield ETFs Fall to 52-Week Low in Bad Sign for Stocks]
  • PowerShares Preferred Portfolio (NYSEArca: PGX) Preferred shares are known for their yield, and this fund gave a 7% yield this year. [Preferred Stock ETFs Lure Yield Hunters]

ALPS Alerian MLP


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.