This posting features a comprehensive review of the established dividend ETF sector. In this view we feature those dividend related ETFs that have more conservative constituents and have been in existence for longer than a few years. There are dozens within the category with more on the way as current western demographics with an aging population gravitate to safer dividend and income sectors. To simplify matters for investors we've whittled choices down to 10. The issues chosen represent a broad cross section of domestic, global, overseas, real estate (REITs) and other sectors from a variety of sponsors. Doing so makes sorting through the sector more manageable for most investors.
Within each category we filter them by placing importance on high assets under management, liquidity and/or strategies that make a difference the most critical tests. Newer issues tied to new indexes with long (over 5 years) of historical data may be worth investigating, featuring and using as alternatives if necessary.
As equity market volatility has increased over the past two years we've noticed a large shift from conventional equity sectors to dividend and income sectors. This trend may continue or stabilize just due to demographics previously cited.Remember just searching for the highest dividend yields can lead to troubled sectors where the ability to maintain the dividend may become questionable. We rank the top 10 ETF by our proprietary stars system as outlined below. If an ETF you're interested in is not included but you'd like to know a ranking send an inquiry to support@ETFDigest.com and we'll attempt to satisfy your interest.
Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity
Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as a bargain and sell for other reasons when high; but, this is not our approach. Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions. #1: SPDR Utilities Select Sector SPDR Fund (XLU) XLU follows the Utilities Select Sector Index. This sector remains the historical first choice for investors seeking stable dividend income with the potential for long-term growth in value and increases in dividends. The fund was launched December 1998. The expense ratio is .20% AUM (Assets under Management) equal $7.2 billion and average daily trading volume is les than 10M shares. As of mid-December 2011 the annual dividend yield is 3.91% and YTD performance 15.03%.
XLU Top Ten Holdings & Weightings
Data as of December, 2011
- Southern Co (SO): 8.76%
- Exelon Corp (EXC): 6.95%
- Dominion Resources Inc (D): 6.94%
- Duke Energy Corporation (DUK): 5.93%
- NextEra Energy Inc (NEE): 5.63%
- American Electric Power Co Inc (AEP): 4.50%
- FirstEnergy Corp (FE): 4.44%
- PG&E Corp (PCG): 4.10%
- Consolidated Edison, Inc. (ED): 4.03%
- Public Service Enterprise Group Inc (PEG): 4.03%
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