Investors still crave income, and savers who have come to rely on a steady cash stream may enjoy the monthly distributions offered by some alternative exchange traded fund strategies.
Most fixed-income and stocks issue quarterly distributions. However, investors who want more frequent yields to cover daily expenses can browse through dividend-paying ETFs that deliver monthly dividends. For instance, as we noted earlier, there are a number of equity-based ETFs that issue monthly yields. [More Monthly Dividend ETFs]
However, investors can also look through a number of alternative and multi-asset ETFs also provide monthly payouts as well. Funds feature include well-known multi-assets ETFs, REIT funds as well as an ETF focused on closed end funds.
iShares Conservative Allocation ETF (NYSEArca: AOK)
12-month yield: 1.96%
Comment: The iShares Conservative Allocation ETF acts like a fund-of-funds, one-stop-shop ETF investment. With the single investment, AOK provides investors the ability to track a broad portfolio of equity and fixed-income funds. Additionally, the ETF targets a more conservative investment strategy based on a low risk tolerance, which can provide a more short-term investment position for retirees looking to generate some extra money.
First Trust NASDAQ Multi-Asset Diversified Income Index Fund (NasdaqGM: MDIV)
12-month yield: 5.76%
Comment: The First Trust Multi-Asset Income Fund takes a more risk tolerant approach to income generation as its portfolio is mainly comprised of dividend-paying stocks. Specifically, MDIV includes exposure to common stocks, real estate investment trusts, preferred securities and master limited partnerships, along with a 15% position in junk bonds.
iShares Morningstar Multi-Asset Income Index ETF (NYSEArca: IYLD)
12-month yield: 5.78%
Comment: This multi-asset income ETF also provides access to a myriad of income-generating assets, but IYLD focuses on high current income. Consequently, the portfolio is slightly riskier, with a heavy emphasis on high-yield, junk bonds and mortgage-backed real estate investment trusts. Additionally, with a 60% exposure to fixed-income assets, along with other rate-sensitive assets, the fund could face headwinds in a rising rate environment.
Arrow Dow Jones Global Yield ETF (NYSEArca: GYLD)
12-month yield: 6.51%
Comment: GYLD provides another multi-asset ETF option for those seeking a diversified investment position with global exposure. The ETF is equally weighted across five sub-indices, including global sovereign debt, global equity, global real estate, global alternatives and global corporate. The global yield ETF provides a good mix of more conservative sovereign and corporate debt securities, along with high yielding master limited partnerships, real estate investment trusts and other stocks. Since the ETF has a global reach, investors will be exposed to foreign currency risks.
PowerShares KBW Premium Yield Equity REIT Portfolio (NYSEArca: KBWY)
12-month yield: 4.99%
Comment: Real estate investment trusts offer a liquid way to acquire real estate assets to diversify an investment portfolio. To qualify as a REIT, companies have to pay out 90% of their taxable income to share holders as dividends, which make the investment option especially attractive to income investors. KBWY targets some of the highest yielding small- and mid-cap REITs in the U.S. and weights holdings by dividend yields.
iShares U.S. Preferred Stock ETF (NYSEArca: PFF)
12-month yield: 6.85%
Comment: PFF is the largest preferred stock ETF on the market with $10.4 billion in assets. Preferreds fall somewhere between bonds and stocks. Preferred share dividends take precedent over common share dividends but fall below bonds in a company’s debt obligation hierarchy. However, they do not benefit from earnings growth of the issuing company, and they will be pressured by a rising rate environment. Other preferred stock ETFs also include attractive yields – the PowerShares Preferred Portfolio (NYSEArca: PGX) has a 6.11% 12-month yield and Global X SuperIncome Preferred ETF (NYSEArca: SPFF) has a 7.13% 12-month yield.
iShares International Preferred Stock ETF (NYSEArca: IPFF)
12-month yield: 5.48%
Comment: The international answer to PFF, the $38.6 million IPFF is steady at the country level with over 91% of its weight allocated to Canada and the U.K. With the recently announced closure of an ETF devoted to Canadian preferreds, IPFF becomes one of the better options for investors looking income from north of the border preferred stocks. IPFF holds 76 preferred issues and charges 0.55% per year.
YieldShares High Income ETF (NYSEArca: YYY)
12-month yield: 9.27%
Comment: The YieldShares High Income ETF tracks Closed-end funds. CEFs are a type of publicly traded company that raised a fixed amount of capital through an initial public offering and trades like a stock on an exchange. However, the CEF only raises a certain amount of capital once through an IPO, so the fund can show steep discounts or premiums to its net asset value. Many CEFs generate high yields by utilizing leverage.