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Top 10 High-Dividend ETFs

Stocks in this article: PSK PFF AMJ AMLP PGF RWO AUSE

 

This posting features a comprehensive review of the established dividend ETF sector. In this view we feature those dividend related ETFs that have a much more aggressive focus on dividends and yield versus more established sectors. Sometimes the focus on dividends to exclusion of other considerations can lead to trouble. Some of the higher yielding ETFs that follow are sourced from more volatile areas of the world and may focus on troubled sectors like financials where reliability of the dividend stream may be questioned.

That said, there is a rapidly expanding list of ETFs from which to choose. This is occasioned in part by equity market volatility leading investors to perceived safer havens. Of perhaps a greater impact is the low levels of yields available from traditional sources like bonds. Low interest rates have combined with current aging demographics where demand for income is greatest. 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. Hopefully, reducing the list will make 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.

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
Excellent liquidity


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
Decent liquidity


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 low 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 Wells Fargo Preferred Stock ETF (PSK)

 

PSK follows The Wells Fargo Hybrid and Preferred Securities Aggregate Index is a modified market capitalization weighted index composed of preferred stock and securities that are functionally equivalent to preferred stock including, but not limited to, depositary preferred securities, perpetual subordinated debt and certain securities issued by banks and other financial institutions that are eligible for capital treatment with respect to such instruments akin to that received for issuance of straight preferred stock. The fund was launched in September 2009. The expense ratio is .45%. AUM (Assets under Management) equal $124M and average daily trading volume is 17K shares. As of mid-September 2011 the annual dividend yield was 6.20% and YTD return was 1.73%.

 

PSK Top Ten Holdings & Weightings

Data as of December, 2011

  1. Barclays Bank plc (BCS.PD): 2.43%
  2. Hsbc Hldgs Pfd: 2.28%
  3. Credit Suisse Guernsey Brh Pfd: 1.81%
  4. Wells Fargo & Co, San Francisco Ca Pfd: 1.80%
  5. Metlife Pfd: 1.72%
  6. Ing Groep N V Pfd: 1.56%
  7. Deutsche Bk Contingent Cap Tr Iii Pfd: 1.55%
  8. Goldman Sachs Grp Pfd: 1.47%
  9. At&T Pfd: 1.46%
  10. Comcast Corp New Pfd: 1.30%

#2: iShares S&P U.S. Preferred Stock ETF (PFF)

 

PFF follows the S&P Preferred Stock Index which seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P U.S. Preferred Stock Index. The fund was launched in March 2007. The expense ratio is .48%. AUM equal $7 billion and average daily trading volume exceeds 1.2M shares. As of mid-December 2011 the annual yield was 6.98% and YTD return -1.17%.

PFF Top Ten Holdings & Weightings

Data as of December, 2011

  1. General Mtrs Cv: 2.71%
  2. Hsbc Hldgs Pfd: 2.52%
  3. Barclays Bank plc (BCS.PD): 1.73%
  4. Wells Fargo & Co, San Francisco Ca Pfd: 1.52%
  5. Bk Amer Pfd: 1.50%
  6. Citigroup Cap Xiii Pfd: 1.49%
  7. Citigroup Cap Xii Pfd: 1.47%
  8. Hsbc Hldgs Pfd: 1.42%
  9. Gmac Cap Tr I Pfd: 1.30%
  10. Metlife Pfd: 1.28%

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