This posting features a comprehensive review of the dividend-related ETF sector. There are over three dozen ETFs issued (including Elements not covered here) with more on the way in this sector to evaluate. To simplify matters for investors weâ¿¿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. Weâ¿¿re not necessarily recommending one issue over another; rather weâ¿¿re just trying to feature those issues that arenâ¿¿t repetitive, although we mention other choices within each brief review where applicable.
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 a replacement if necessary.
As demographics in the developed world change with aging populations, the demand for income increases while risk avoidance increases. At the same time, many investors understand the need for growth continues given the potential for inflation. Keeping a portion of a portfolio in common stocks among other sector allocations is important; however, adding yield through dividends can help achieve the dual goal.
Remember just searching for the highest dividend yields can lead to troubled sectors where the ability to maintain the dividend is questionable.
XLU (SPDR Utilities Sector ETF) 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 $6.2 billion and average daily trading volume is les than 10M shares. As of mid-September 2011 the annual dividend is $.69 making the current yield is 3.90% and YTD performance 8.42%.
Data as of September 2011
XLU Top Ten Holdings & Weightings
- Southern Co (SO): 8.58%
- Exelon Corp (EXC): 6.98%
- Dominion Resources Inc (D): 6.86%
- NextEra Energy Inc (NEE): 5.85%
- Duke Energy Corporation (DUK): 5.67%
- American Electric Power Co Inc (AEP): 4.57%
- FirstEnergy Corp (FE): 4.52%
- Public Service Enterprise Group Inc (PEG): 4.22%
- PG&E Corp (PCG): 4.14%
- PPL Corp (PPL): 4.09%