In the ongoing search for yields, investors can take a look at an outperforming infrastructure exchange traded fund (ETF) that offers some attractive payouts to boot.
The Guggenheim High Income Infrastructure ETF (NYSEArca: GHII), which is composed of the 50 highest-dividend-paying global infrastructure companies, has been outperforming other infrastructure sector-related ETFs, rising 16.0% year-to-date.
Moreover, GHII shows a 5.83% 30-day SEC yield. The fund tries to maximize income generation through a so-called yield-weighting methodology where components with higher payouts have a larger weight.
Related: Dividend Growth ETFs Grow to Top of the List
GHII’s recent outperformance may be attributed to its asset category allocations. Specifically, the infrastructure ETF is the only one of six ETFs in Morningstar’s Infrastructure category that has a mid-cap value tilt.
As growth stocks fell out of favor this year in response to heightened volatility in the earlier months, the value style came back into play. So far this year, value stocks have been outperforming the growth category, with conservative bets gaining prominence as a safety play. Additionally, within the value category, dividend stocks also garnered a lot of attention after a dovish Federal Reserve signaled fewer interest rate cuts this year, prolonging a low-yield environment.
Related: Trouble Brewing For Technology ETFs
Meanwhile, the middle capitalization category has also outperformed, with the S&P 400, a benchmark for mid-cap companies across the U.S., up 5.9% this year, compared to the 2.5% increase in the S&P 500 and 0.5% gain in the Russel 2000.
Potential investors, though, should be aware that GHII is still rather small with $2.48 million in assets under management, so use limit orders to better control trades.
[related_stories]Looking ahead, the sector could enjoy increased investments as world governments update their aging and deteriorating infrastructures. For instance, the American Society of Civil Engineers estimated that $3.32 trillion in infrastructure investments will be required between 2016 and 2025. Infrastructure financing is among the major issues for current presidential candidates – Bernie Sanders wants to spend $1 trillion, Hillary Clinton wants $275 billion and Trump, who has not given a specific dollar number, has pointed to allocating some of the $4 trillion used in overseas ventures at home instead, reports Daniel J. McGraw for NextCity.
“This is the 21st century, but our transportation systems are stuck in the 20th,” Terry O’Sullivan, General President of the Laborers’ International Union of North America, said, according to DailyKos. “One of four bridges in the U.S. is structurally deficient or obsolete, more than half the miles we drive on federal highways are on roads in less than good condition and our transit systems are stretched beyond capacity. This is a recipe for falling behind, not competing in the global economy. We can put men and women back to work building America, get our economy on track and leave behind real assets for taxpayers and future generations.”
For more information on the infrastructure sector, visit our infrastructure category.
Guggenheim High Income Infrastructure ETF