The Single Best ETF Strategy for Second Half of the Year

NEW YORK (TheStreet) -- To me, it's all about income -- either current or future -- and the single best exchange-traded fund for this purpose is the State Street S&P Dividend ETF (SDY).

It's a well-diversified portfolio of high-quality dividend paying stocks, many of whom raise their dividends consistently. Among the top holdings are PepsiCo  (PEP), Coca Cola  (KO), AT&T  (T), Chevron  (CVX) and many other household names.

If markets continue to rise without any meaningful correction (over 5% e.g.), the underlying stocks should do well.

In the event of a pullback or even a prolonged period of underperformance, the dividends will soften the impact of the correction and will keep building for a future income stream.

Now, of course, I'm not suggesting you put all your eggs in one basket, as it were. So before any new or increase allocations to SDY, you should have already prepared your portfolio by trimming bond funds to the minimum. As I've pointed out before, whether interest rates rise or not, bonds are not holding their value as a whole.

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Second, you may have positions in individual stocks that you feel are performers for the long haul, despite any dip which might occur tied to a pullback, correction or other. I'm not saying dump them, by any means, but check them again mid-year now that earnings seasons has pulled the curtain back. Make sure your assumptions about the fundamentals of those stocks still hold.

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