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Top 10 Dividend ETFs

PID (PowerShares International Dividend Achievers ETF) tracks the companies that have increased their annual dividends for five or more consecutive years. It was launched in September 2009. AUM equal $530 million and average daily trading volume is around 123K shares. The expense ratio is .50% while the quarterly dividend currently is $.07 making the yield less than 2%. Again in the international space currency issues should always be a consideration.

Other ETFs to consider within this space include IDV (iShares International Select Dividend ETF) which follows the Dow Jones International Select Dividend ETF), DWX (SPDR International Dividend ETF) and DWM (Wisdom Tree DEFA ETF). In addition, Global X just issued SDIV (Solactive Global Super Dividend ETF).

Data as of June 2011

PID Top Ten Holdings & Weightings

  1. Partner Communications Company, Ltd. ADR (PTNR):            4.94%
  2. Philippine Long Distance Telephone ADR (PHI):                     3.99%
  3. Telefonica, S.A. ADR (TEF):                                                    3.62%
  4. National Grid PLC ADR (NGG):                                               3.31%
  5. Teekay LNG Partners L.P. (TGP):                                           3.30%
  6. GlaxoSmithKline PLC ADR (GSK):                                           3.09%
  7. AstraZeneca PLC ADR (AZN):                                                 3.04%
  8. Vodafone Group PLC ADR (VOD):                                          2.55%
  9. British American Tobacco PLC ADR (BTI):                              2.53%
  10. Telefonos de Mexico SAB de CV ADR (TMX):                                    2.50%

VYM (Vanguard High Dividend Yield ETF) tracks the FTSE High Dividend Yield Index and was launched November 2006. Much of Vanguard's remains their low expense ratio which for this ETF is only .18%. AUM equals $1.3 billion and average daily trading volume is roughly 156K shares. The quarterly dividend is $.31 putting the yield at less than 3%. The YTD return is 4.59% through June 2011. When you begin focusing on "high yield" you're adding more risk potentially and should receive better returns than commonly available with higher graded securities. VYM is in the Large Cap space so quality isn't necessarily as much an issue.

Alternative choices in this sector include among others HDV (iShares High Dividend ETF) and PFM (PowerShares Dividend Achievers ETF).  

Data as of June 2011

VYM Top Ten Holdings & Weightings

  1. ExxonMobil Corporation (XOM):                      7.28%
  2. Chevron Corporation (CVX):                            3.69%
  3. General Electric Company (GE):                      3.67%
  4. Microsoft Corporation (MSFT):                        3.66%
  5. AT&T, Inc. (T):                                                             3.12%
  6. Procter & Gamble Company (PG):                   2.96%
  7. Pfizer Inc. (PFE):                                             2.81%
  8. Johnson & Johnson (JNJ):                              2.79%
  9. Coca-Cola Company (KO):                               2.64%
  10. Wal-Mart Stores, Inc. (WMT):                          2.39%

PEY (PowerShares High Yield Dividend Achievers ETF) tracks the Dividend Achiever 50 Index which is based on dividend yield and consistent growth in dividends. The fund was launched December 2004. The expense ratio is .50% and covers a multi-cap of assets. AUM is over $200 million and average daily trading volume is roughly 138K shares. The current monthly dividend is $.03 and the yield is over 3.80%.  The YTD return through May 2011 is -2.82%.

Data as of June 2011

PEY Top Ten Holdings & Weightings

  1. Century Link, Inc. (CTL):                                 3.42%
  2. Mercury General Corporation (MCY):             2.99%
  3. Altria Group Inc. (MO):                                    2.84%
  4. AT&T, Inc. (T):                                                             2.71%
  5. PPL Corp (PPL):                                              2.67%
  6. Pitney Bowes Inc. (PBI):                                  2.61%
  7. Enterprise Products Partners L.P. (EPD):        2.61%
  8. Old Republic International (ORI):                     2.58%
  9. Vectren Corp (VVC):                                        2.50%
  10. People's United Financial, Inc. (PBCT):           2.45%

DEM (WisdomTree Emerging Markets Equity Income ETF) is a fundamentally weighted index featuring the highest yielding from the WisdomTree Emerging Market Dividend Index. The fund was launched July 2007. AUM $1.6 billion and average daily trading volume is just under 250K shares. The expense ratio is .63%. The current quarterly dividend equals $.17 providing a yield of just over 1% which is quite low given the higher risk nature of emerging markets. The YTD return through May 2011 is 2.97%.

An alternative choice may be EDIV (SPDR S&P Emerging Market Dividend ETF) issued recently in February 2011.

 

CVY (Guggenheim Multi-Asset Income ETF) tracks the Zacks Multi-Asset Income Index which is designed to identify and track companies with high income and positive risk/reward characteristics. The ETF was launched in September 2006. AUM is over $400M and average daily trading volume exceeds 145K shares. The expense ratio is .60% and the quarterly dividend is currently $.26 making a yield close to 5%. YTD performance or return has been 5.33%.

Alternative choices include DEF (Guggenheim Defensive Equity ETF) and DHS (WisdomTree High-Yielding Equity ETF)

 

 

Data as of June 2011

CVY Top Ten Holdings & Weightings

1.    Lorillard, Inc. (LO):                                    1.46%

2.    Linn Energy LLC (LINE):                           1.32%

3.    Chevron Corporation (CVX):                      1.26%

4.    ConocoPhillips (COP):                               1.18%

5.    Provident Energy Ltd. (PVX):                     1.15%

6.    GlaxoSmithKline PLC ADR (GSK):             1.10%

7.    Philip Morris International, Inc. (PM):         1.10%

8.    HSBC Holdings Pfd:                                  1.09%

9.    Merck & Co Inc (MRK):                              1.08%

10.  Altria Group Inc. (MO):                              1.07%

As with other income oriented sectors, ETFs structured with higher dividends as a priority are much in demand given aging demographics in developed countries. With these issues growth opportunities in overall asset appreciation and increases in dividends are present. Nevertheless, as yields are now quite low historically, investors must remember that low yields will not protect them in a rising interest rate environment or any significant stock market corrections.

 

As stated with other sectors, remember ETF sponsors must issue and their interests aren't aligned with yours. They have a business interest and wish to have a competitive presence in any popular sector.

For further information about portfolio structures using retail or other ETFs see www.etfdigest.com.

You may address any feedback to: feedback@etfdigest.com  

(Source for holding data is from ETF Database and from various sponsors.)



>>To see these ETFs in action, visit the 10 Top Dividend ETFs portfolio on Stockpickr.

Stock quotes in this article: XLU, DVY, VIG, IYR, RWX, PID, VYM 
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.

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