The dividend landscape, here in the U.S. and abroad, continues to favor income investors.
Net dividend increases totaled $17.8 billion in the first quarter, up almost 23% year-over-year. Nearly 1,100 dividend increases were reported during the quarter, displacing the prior first quarter record of 1,069 set in 1979. Q1 2014 is 14.2% higher than the 944 increases in Q1 2013, according to S&P Dow Jones Indices. [Good Q1 for Dividends, but Some Payout ETFs Lost Cash]
As seasoned dividend investors know, most U.S. companies pay dividends on common stock on a quarterly basis, though there are some real estate investment trusts and master limited partnerships that pay monthly. Many foreign dividend stocks deliver their payouts just once or twice per year.
Investors looking for increased payout regularity have options with exchange traded funds. Yes, that means with more than just bond ETFs, most of which feature monthly payouts. In fact, we dug up 10 ETFs that pay monthly dividends.
None of the funds included here are bond ETFs and none are multi-asset ETFs, several of which deliver monthly payouts as well. Many of the ETFs featured here are well-known and chock full of some of the most familiar dividend stocks. That includes the …
Global X SuperDividend ETF (NYSEArca: SDIV)
Trailing 12-month yield: 6.41%
Comment: With a monthly payout, SDIV is a rarity among global dividend ETFs. With almost $929 million in assets, it is also one of the largest Global X ETFs. Part of SDIV’s large yield is derived from an almost 26% weight to REITs with utilities and telecom, two other favored dividend destinations, combing for almost 26% of the fund as well. The U.S. and Australia combine for almost 44% of SDIV’s country exposure, which is heavily tilted toward developed markets.
PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV)
Trailing 12-month yield: 2.48%
Comment: SPLV’s inclusion on this list is something of a pleasant surprise because the ETF is framed as a low volatility ETF, of which it is the largest in that genre, more than a dividend play. Low volatility in the case of SPLV means a combined 42.6% weight to the dividend-rich utilities and consumer staples sectors. SPLV’s dividend is paid at the end of the month and the ETF usually trades ex-dividend somewhere between the 13th and 15th of each month. The ETF has cousin that is an explicit dividend play, that being the…
PowerShares S&P 500 High Dividend Portfolio (NYSEArca: SPHD)
Trailing 12-month yield: 3.3%
Comment: SPHD is a combination low volatility/high dividend ETF, a strategy that has helped the ETF gain 9% this year while being one of the top-performing U.S. large-cap funds. It also helps that SPHD has a nearly 27% weight to utilities, the best-performing sector in the S&P 500. SPHD’s payout schedule is similar to SPLV’s. [Quiet Rally for This Dividend ETF]
First Trust High Income ETF (NasdaqGM: FTHI)
Distribution rate: 3.56%
Comment: FTHI is the newest ETF on this list, having debuted in early January. The actively managed ETF uses a covered call strategy that consists of writing calls on the S&P 500, though its sector weights do no exactly mirror the S&P 500 as staples lead the way at 25%.
Horizons Financial Select Sector Covered Call ETF (NYSEArca: HSPX)
30-day SEC yield: 1.44%
Comment: Speaking of covered calls, the Horizons S&P 500 Covered Call ETF is one of the leaders in that ETF space. In sideways, bear or even modest bull markets, covered call ETFs such as HSPX can work in investors’ favor. By utilizing a covered call strategy, an investor who owns a stock sells call options, and collects the income from the premiums paid by the buyer of the option. Specifically, the underlying index utilizes an “out-of-the-money” covered call strategy.
HSPX has a sector equivalent in the form of the Horizons Financial Select Sector Covered Call ETF (NYSEArca: HFIN), which also pays a monthly dividend. [Two ETFs for a Market Pullback]
Global X SuperDividend U.S. ETF (NYSEArca: DIV)
Trailing 12-month yield: 5.63%
Comment: DIV is the U.S. equivalent of SDIV and serves as a perfect example of a “right place, right time ETF.” That means DIV has an almost 38% combined weight to utilities and energy stocks with another 27.4% going to REITs, cementing DIV’s status as a good idea at a time when Treasury yields are falling.
WisdomTree U.S. Dividend Growth Fund (NasdaqGM: DGRW)
Distribution yield: 1.6%
Comment: DGRW will celebrate its first anniversary later this month, but the fund has already surpassed the $100 million in assets mark ($108.5 million to be precise).
Rather than focusing on what constituent companies have previously done with their dividends or dividend increase streaks, DGRW’s nearly 300 holdings are screened on a combination of growth and value factors and then weighted by projected cash payouts for the coming year. Importantly, DGRW is heavily allocated to sectors that are expected to sources of future dividend growth, such as tech and consumer discretionary. [WisdomTree Dividend Growth ETF Tops $100M in Assets]
WisdomTree LargeCap Dividend Fund (NYSEArca: DLN)
Distribution yield: 2.1%
Comment: Like DGRW and all of the other U.S.-focused WisdomTree dividend ETFs, DLN pays a monthly dividend. DLN is nearly eight years old and as a more mature dividend ETF it competes with some the household names of the dividend ETF group. “Beat” may be a better word because in news that is relevant to long-term investors, DLN has frequently topped its larger rivals over the past several years. [A Familiar Dividend ETF to Revisit]
PowerShares KBW High Dividend Yield Financial Portfolio (NYSEArca: KBWD)
Trailing 12-month yield: 7.53%
Comment: KBWD is not a typical bank ETF. The ETF is heavy on REITs, particularly mortgage REITs (39%) and has the flexibility to also include high-yielding business development companies. KBWD’s distribution schedule is similar to the other PowerShares ETFs highlighted here.
WisdomTree MidCap Dividend Fund (NYSEArca: DON)
Distribution yield: 1.92%
Comment: It does not always have to be about large-caps when it comes to dividend stocks and ETFs. DON, which just entered the $1 billion in assets under management, proves as much. DON’s underlying index has a dividend yield of almost 3.1% with a price-to-book ratio of 2.4, according to issuer data. Nearly half of the almost 400 stocks held by DON have dividend yields in excess of the 10-year Treasury yield, currently 2.62%. [Dividends Gain an Advantage]