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ETF Digest

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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 show investors 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.

Each category is filtered by placing importance on high assets under management, liquidity and/or strategies that make a difference being 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 combined with previously noted changing demographics there has been a large shift from conventional equity sectors to dividend and income sectors. This trend may continue for a longer period than anyone can expect.

Remember just searching for the highest dividend yields can lead to troubled sectors where the ability to maintain the dividend may become questionable.

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.

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#10:

SPDR

Dow Jones International Real Estate ETF (RWX)

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RWX

TheStreet Recommends

follows the Dow Jones Global ex-U.S. Real Estate Securities Index which consists of REITs in developed and emerging markets. It was launched in December 2006. AUM equal $2.5 billion while average daily trading volume is over 588K shares. As of early March 2012 the annual dividend yield is 3.68% and YTD performance 14.67%. The one year return was -4.86%. The poor performance is the result of chaos overseas particularly within the eurozone. 

RWX Top Ten Holdings & Weightings

Data as of First Quarter 2012

    Westfield Group (WDC): 7.08%

    Unibail-Rodamco SE (UL): 6.21%

    Brookfield Asset Management, Inc. (BAM): 6.16%

    Mitsui Fudosan Co., Ltd. (8801): 5.89%

    Land Securities Group PLC (LAND): 2.97%

    Hang Lung Properties Ltd. (00101): 2.96%

    Link Real Estate Investment Trust (00823): 2.95%

    Westfield Retail Trust (WRT): 2.75%

    Hongkong Land Holdings Ltd. (H78): 2.41%

    Dz Bk Ag ( Wts/Rts): 2.34%

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    #9:

    Vanguard

    Real Estate ETF (VNQ)

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    VNQ

    follows the MSCI US REIT Index which is a benchmark of U.S. property trusts that covers about two-thirds of the value of the entire U.S. REIT market.  The fund was launched in September 2004. The expense ratio is .12%. AUM equal $10.7 billion and average daily trading volume is 1.8M shares. As of early March 2012 the annual dividend yield is 3.34% and YTD return 6.71%. The one year return was 11.00%.

    IYR

    (iShares Dow Jones U.S. Real Estate ETF) follows the index of the same name. Risks for the sector are higher due to most assets consist of REITs (Real Estate Investment Trusts) which are much more volatile and economically sensitive. It's said that over the next 5 years REITs have $3 trillion in outstanding debts due or to refinance. The fund was launched in June 2000. The expense ratio is .48%. AUM equal $3.7 billion while average daily trading volume is nearly 5.6M shares. As of early March 2012 the annual dividend yield is 3.60% and YTD performance 5.81%.  The one year return was 6.95%. 

    Data as of December 2011

    VNQ Top Ten Holdings & Weightings

      Simon Property Group Inc (SPG): 10.43%

      Public Storage (PSA): 5.38%

      Equity Residential (EQR): 4.66%

      HCP Inc (HCP): 4.65%

      Ventas Inc (VTR): 4.16%

      Boston Properties Inc (BXP): 4.03%

      ProLogis Inc (PLD): 3.62%

      Vornado Realty Trust (VNO): 3.52%

      AvalonBay Communities Inc (AVB): 3.38%

      Host Hotels & Resorts Inc (HST): 2.87%

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      #8:

      First Trust

      Morningstar Dividend Leaders ETF (FDL)

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      FDL

      follows a modified market capitalization weighted index of publicly traded companies that have shown dividend consistency and dividend sustainability. Morningstar identifies a universe of eligible companies through the application of its proprietary multi-step screening process and selects the top 100 stocks, based on dividend yield, for the index. The fund was launched in March 2006. The expense ratio is .45%. AUM equal over $476 million and average daily trading volume is over 350K shares. As of early March 2012 the annual dividend yield is 3.46% and YTD performance .57%.  The one year return was 11.95%. 

      FDL Top Ten Holdings & Weightings

      Data as of First Quarter 2012

        AT&T Inc (T): 9.94%

        Johnson & Johnson (JNJ): 9.46%

        Verizon Communications Inc (VZ): 8.85%

        Merck & Co Inc (MRK): 8.12%

        ConocoPhillips (COP): 5.06%

        Abbott Laboratories (ABT): 4.73%

        Bristol-Myers Squibb Company (BMY): 3.47%

        Kraft Foods Inc (KFT): 3.19%

        Eli Lilly and Company (LLY): 3.07%

        Southern Co (SO): 2.65%

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        #7:

        Vanguard Dividend

        Appreciation ETF (VIG)

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        VIG

        follows the Broad Dividend Achievers Index which features constituent companies with a history of increasing dividends. It was launched in April 2004. The expense ratio is .24%. AUM equals $10 billion and an average daily trading volume of 1.3M shares. As of early March 2012 the annual dividend yield is 2.04% and YTD return 5.25%. The one year return was 6.63%.

        An alternative consideration would be

        VYM

        (Vanguard High Dividend Yield ETF). It follows the FTSE High Dividend Yield Index which consists of large-cap issues from global companies ex-REITs. The fund was launched in November 2006. The expense ratio is .18%. AUM equals $3 billion and average daily trading volume is roughly 530K shares. As of early March 2012 the annual dividend yield is 2.79% and YTD performance 3.80%. The one year return was 10.28%. 

        VIG Top Ten Holdings & Weightings

        Data as of First Quarter 2012

          McDonald's Corporation (MCD): 5.31%

          International Business Machines Corp (IBM): 4.49%

          Chevron Corp (CVX): 4.42%

          Coca-Cola Co (KO): 4.39%

          Exxon Mobil Corporation (XOM): 4.17%

          ConocoPhillips (COP): 4.13%

          Procter & Gamble Co (PG): 4.09%

          Wal-Mart Stores Inc (WMT): 4.08%

          PepsiCo Inc (PEP): 3.98%

          United Technologies Corp (UTX): 3.48%

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          #6:

          WisdomTree

          Dividend ex-Financials ETF (DTN)

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          DTN

          index measures the performance of high dividend-yielding stocks outside the financial sector. The index consists primarily of large- and mid-capitalization companies listed on major U.S. stock exchanges that pass WisdomTree Investments market capitalization, liquidity and selection requirements. The fund was launched in June 2006. The expense ratio is .38%. AUM equal $1.2 billion and average daily trading volume is over 220K shares. As of early March 2012 the annual dividend yield is 3.01% and YTD performance 4.52%.  The one year return was 12.93%.

          DTN Top Ten Holdings & Weightings

          Data as of First Quarter 2012

            Frontier Communications Corp Class B (FTR): 3.36%

            Southern Copper Corporation (SCCO): 2.74%

            Windstream Corp (WIN): 2.48%

            CenturyLink Inc (CTL): 2.40%

            AT&T Inc (T): 1.71%

            Altria Group Inc. (MO): 1.63%

            Avon Products Inc (AVP): 1.63%

            Lockheed Martin Corporation (LMT): 1.62%

            Lorillard, Inc. (LO): 1.53%

            Reynolds American Inc (RAI): 1.51%

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            #5:

            WisdomTree

            High Yielding Equity ETF (DHS)

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            DHS

            follows the Wisdom Tree Equity Income Index which is a fundamentally weighted index measuring the performance of companies with high dividend yields selected from the WisdomTree Dividend Index. At the index measurement date, companies within the WisdomTree Dividend Index with market capitalizations of at least $200 million and average daily trading volumes of at least $200,000 for the prior three months are ranked by dividend yield. The fund was launched in June 2006. The expense ratio is .38%. AUM equal $415 million and average daily trading volume is over 100K shares. As of early March 2012 the annual dividend yield is 3.21% and YTD performance 3.15%. The one year return was 14.44%. 

            DHS Top Ten Holdings & Weightings

            Data as of First Quarter 2012

              AT&T Inc (T): 7.68%

              General Electric Co (GE): 5.15%

              Johnson & Johnson (JNJ): 4.55%

              Pfizer Inc (PFE): 4.41%

              Procter & Gamble Co (PG): 4.30%

              Philip Morris International, Inc. (PM): 4.24%

              Verizon Communications Inc (VZ): 4.00%

              Merck & Co Inc (MRK): 3.90%

              Intel Corp (INTC): 3.50%

              ConocoPhillips (COP): 2.78%

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              #4:

              Guggenheim

              Multi-Asset Income ETF (CVY)

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              CVY

              follows the Zacks Multi-Asset Income Index which is designed to identify and track companies with high income and positive risk/reward characteristics. The fund was launched in September 2006. The expense ratio is .60%. AUM equal $457 million and average daily trading volume exceeds 287K shares.  As of early March 2012 the annual dividend yield is 5.01% and YTD performance 6.06%. The one year return was 8.28%. 

              CVY Top Ten Holdings & Weightings

              Data as of December, 2011

                Enterprise Products Partners LP (EPD): 1.66%

                Kinder Morgan Energy Partners LP (KMP): 1.65%

                Seadrill Ltd (SDRL): 1.45%

                ConocoPhillips (COP): 1.29%

                Plains All American Pipeline LP (PAA): 1.28%

                Chevron Corp (CVX): 1.28%

                General Mtrs Cv: 1.26%

                Energy Transfer Partners, L.P. (ETP): 1.26%

                Bk Amer Pfd: 1.23%

                International Paper Co. (IP): 1.14%

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                #3:

                Wisdom Tree

                Total Dividend Fund ETF (DTD)

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                DTD

                follows the Wisdom Tree Dividend Index which is a fundamentally-weighted index that defines the dividend-paying portion of the U.S. stock market. The Index measures the performance of US companies, listed on the NYSE, AMEX or NASDAQ Global Market, that pay regular cash dividends and that meet other liquidity and capitalization requirements established by WisdomTree. The fund was launched in June 2006. The expense ratio is .28%. AUM equal $235 million and average daily trading volume is 27K shares As of early March 2012 the annual dividend yield is 2.65% and YTD performance 4.65%.  The one year return was 9.50%. 

                DTD Top Ten Holdings & Weightings

                Data as of First Quarter 2012

                  AT&T Inc (T): 3.46%

                  Exxon Mobil Corporation (XOM): 3.15%

                  Microsoft Corporation (MSFT): 2.64%

                  General Electric Co (GE): 2.30%

                  Chevron Corp (CVX): 2.24%

                  Johnson & Johnson (JNJ): 2.06%

                  Pfizer Inc (PFE): 1.99%

                  Procter & Gamble Co (PG): 1.95%

                  Philip Morris International, Inc. (PM): 1.91%

                  Verizon Communications Inc (VZ): 1.81%

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                  #2:

                  iShares

                  Dow Jones Select Dividend ETF (DVY)

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                  DVY

                  follows the Dow Jones Dividend Select Index. The fund was launched in November 2003. The expense ratio is .40%. AUM equal $10 billion and average daily trading volume exceeds 1.6M shares. As of early March 2012 the annual dividend yield is 3.34% and YTD performance 1.95%.  The one year return was 11.08%. 

                  DVY Top Ten Holdings & Weightings

                  Data as of First Quarter 2012

                    Lorillard, Inc. (LO): 3.91%

                    Lockheed Martin Corporation (LMT): 2.90%

                    Chevron Corp (CVX): 2.16%

                    CenturyLink Inc (CTL): 2.05%

                    Entergy Corp (ETR): 1.96%

                    Kimberly-Clark Corporation (KMB): 1.84%

                    McDonald's Corporation (MCD): 1.80%

                    Integrys Energy Group Inc (TEG): 1.77%

                    Watsco, Inc. (WSO): 1.59%

                    PPG Industries, Inc. (PPG): 1.58%

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                    #1:

                    SPDR

                    Utilities Select Sector SPDR Fund (XLU)

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                    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 .18%.  AUM (Assets under Management) equal $6.3 billion and average daily trading volume is less than 7M shares. As of early March 2012 the annual dividend yield is 3.90% and YTD performance -3.00%.  The one year return was 13.19%.  

                    Data as of First Quarter 2012

                    XLU Top Ten Holdings & Weightings

                      Southern Co (SO): 8.99%

                      Dominion Resources Inc (D): 6.78%

                      Exelon Corp (EXC): 6.11%

                      Duke Energy Corporation (DUK): 6.07%

                      NextEra Energy Inc (NEE): 5.93%

                      FirstEnergy Corp (FE): 4.37%

                      American Electric Power Co Inc (AEP): 4.31%

                      Consolidated Edison, Inc. (ED): 4.04%

                      PG&E Corp (PCG): 4.01%

                      PPL Corp (PPL): 3.91%

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                      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.

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                      Strong established linked index

                      Excellent consistent performance and index tracking

                      Low fee structure

                      Strong portfolio suitability

                      Excellent liquidity

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                      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

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                      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

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                      Index is new

                      Issue is new and needs seasoning

                      Fees are high

                      Portfolio suitability also needs seasoning

                      Liquidity below average

                      It's also important to remember that ETF sponsors have their own competitive business interests when issuing products which may not necessarily align with your investment needs. New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

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                      The ETF Digest has no current positions in the featured ETFs.

                      (Source for data is from ETF sponsors and various ETF data providers)

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