This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Seven ETFs To Play Deflation

Stocks in this article: PEY DTN DVY

NEW YORK ( TheStreet) -- As deflationary concerns continue to make headlines among investors, dividend-paying investments, interest-bearing investments and cash become more appealing.

Weak economic figures, a decline in money supply and fiscal tightening around the world are a few reasons why falling prices could be in the near future. Other factors that could lead to a drop in prices include tight credit markets, declines in consumer spending and high unemployment. These could lead to a reduction in the demand for goods. Declines in the demand for goods eventually results in excess supply, which further leads to a decline in prices to bring supply and demand in equilibrium.

A fall in prices can be detrimental to an economic recovery if businesses and consumers become reluctant to spend and decide to hold on to any disposable cash. This decrease in money supply is most devastating to economies which are highly-dependent on consumer spending, such as the United States. Other results of deflation include erosion to consumer confidence and amplification to the burden of both household and public-sector debt.

Signs of deflation in the U.S. have already started to emerge. According to the Bureau of Labor Statistics, the consumer price index has been dropping over the last three months. In June, CPI dropped by 0.1%, in May by 0.2% and in April by 0.1% pushing the price index below its January 2010 levels. In general, as CPI declines, deflation looms. Additionally, the Federal Reserve recently reported that consumer credit decreased at an annual rate of 4.5% in May and revolving credit decreased at an annual rate of 10.5% during the same time period. These declines in credit utilization contributed to a 1.2% decrease in consumer spending, a trend prevalent in times of deflation because consumers believe that dollars will be worth more in the future and are postponing purchases.

Generally, cash is the best investment in times of deflation; however, one could also consider investments with a steady cash flow stream that shoot off generous dividends and interest payments. Some deflationary plays, which give diversified access to the dividend-paying stocks like Altria (MO), AT&T (T) and CenturyLink (CTL) include:

  • PowerShares HighYield Dividend Achievers (PEY), which boasts a yield of 4.4%
  • WisdomTree Dividend ex-Financials (DTN), which has a yield of 3.91%
  • iShares Dow Jones Select Dividend Index (DVY), which has a yield of 3.67%
  • SPDR S&P Dividend (SDY), which has a yield of 3.44%.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs