ETF Trends
ETF Trends

Dividend ETFs should remain popular in 2013 for yield as the dividend tax rate for most investors will stay at 15% as part of the fiscal cliff deal, not including the Affordable Care Act surcharge of 3.8% for some.

“After a brief year-end disruption related to the fiscal cliff negotiations, the hunt for dividend income is back on with a vengeance,” reports Jeff Benjamin at InvestmentNews.

Under the fiscal cliff deal, the tax rate on qualified dividend income jumps to 23.8% for households earning more than $450,000, or $400,000 for a single person, which includes a 3.8% tax on investment income to help pay for Obamacare, according to the article. The health care law tax kicks in for households making $250,000, or $200,000 for singles, adding up to an 18.8% tax on dividends and capital gains at those income levels. [Dividend Stocks, ETFs Could See Higher Payouts]

“At the end of the year, people were unloading their dividend payers, but a lot of that has since snapped back, and dividend stocks have started to resume their strong performance,” said Jay Wong, a portfolio manager at Payden & Rygel, in the InvestmentNews story.

The largest dividend ETFs include Vanguard Dividend Appreciation ETF (NYSEArca: VIG), Vanguard High Dividend Yield (NYSEArca: VYM), iShares Dow Jones Select Dividend Index (NYSEArca: DVY), SPDR S&P Dividend ETF (NYSEArca: SDY), Schwab U.S. Dividend Equity ETF (NYSEArca: SCHD) and WisdomTree LargeCap Dividend Fund (NYSEArca: DLN).

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