Dividend Focused ETFs

Posted on 04/12/2011

Finding different income solutions is a topic we have discussed in the past, as we realize that a large majority of the portfolios out there have a need for a least some current income.  This comes into focus even more when you consider the current rate on a 6 month CD is quoted at 0.61% and a 1 year CD is at 0.92% (source: Bankrate.com).  Fixed income exposure in a portfolio is one preferred way for gaining income, although the asset class as a whole is not particularly strong now.  The 30 Year Treasury Index (TYX) and the Ten Year Treasury Index (TNX) are trading at 4.575% and 3.5%, respectively.  However, as rates rise, the value of bonds will fall.  Therefore, many who are willing to accept a higher threshold of risk are now looking to the equity markets in order to fulfill this income piece of the pie. 

Specifically in the exchange traded industry, we have seen an explosion of higher yielding ETFs introduced over the last couple of years.  With that said, we thought it was timely to create an inventory of ETFs that are currently yielding greater than 4% for both the domestic and international sides.

There are currently over 1000 ETFs trading; however we were able to drilldown within that large universe to a manageable list by putting a lower limit on the yield criteria.  For instance, there are 226 foreign ETFs, but only 17 of those have a yield of greater than 4%.  There are also a number of ETFs which focus specifically on a dividend strategy, both domestically and internationally.  Listed below are two tables, the first focuses on market and sector based ETFs while the second table is geared toward dividend related ETFs on the international front.

Dom ETFs

Intl ETF

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Symbol Performance
TAN 51.982%
QCLN 47.578%
DBJP 44.706%
DXJ 42.706%
XIV 39.361%
IDXJ 38.207%
GEX 37.862%
KWT 36.869%
BBH 36.037%
PBW 33.088%
IBB 31.890%
Sector Symbol Performance
Energy TAN 51.982%
Healthcare BBH 36.037%
Financial KBWI 27.895%
Consumer Cyclical XRT 24.928%
Consumer Noncyclical FXG 24.437%
Industrial IYT 21.325%
Technology SOXX 20.580%
Utilities PSCU 14.614%
Basic Materials PSCM 14.544%
Telecommunications VOX 13.798%

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