High-Dividend ETF Plays

by on November 23, 2009 | Updated April 23, 2013 | ETFs Mentioned:

As investors have regained their appetite for risk, cash has flowed into domestic and international equities, rewarding the “bargain hunters” who snapped up equities near the market bottom when pricing multiples and dividend yields were severely depressed. While these “too good to be true” investments are now much less abundant, they haven’t disappeared altogether.

For Investors Seeking A High Dividend Yield, Options Are PlentifulThere are a number of blue-chip stocks that are currently offering attractive dividend yields, including Kraft, Clorox, and AT&T. “A lot of these steady Eddies have been left behind by this year’s mad stampede for higher-risk, higher-excitement investments — from China to the Cheesecake Factory,” writes Brett Arends for the Wall Street Journal. “It’s a good time to remember that high-excitement stocks often end up providing investors with high drama and high blood pressure instead.” Arends goes on to note that high-dividend stocks may be particularly attractive in the environment, where short-term fixed income investments offer virtually no return and long-term fixed income securities leave investors vulnerable to the ravages of inflation.

High-Yielding Equity ETFs

In addition to high-yielding, high-quality stocks, there are a number of ETFs focusing on stocks that are currently offering an attractive dividend yield. For investors looking to generate fixed income-like cash flows through equities, there are a number of ETF options that don’t entail the company-specific risk of individual stock-picking. For more actionable ETF investment ideas, sign up for our free ETF newsletter.

  • iShares Dow Jones Select Dividend Index Fund (DVY): The index underlying this ETF screens potential components by dividend-per-share growth rate, dividend payout percentage rate, and average daily dollar trading volume. With a current 30-day SEC yield of about 3.9% and similar distribution yield, DVY is an interesting option.


  • PowerShares International Dividend Achievers Portfolio (PID): For investors looking for high dividend payouts from overseas, this ETF may be your best bet. PID allocates less than 10% of its holdings to U.S. stocks, and has a 30-day SEC yield of 3.3%.


  • WisdomTree Total Dividend Fund (DTD): This ETF tracks an index composed of more than 1,100 U.S.-listed companies that pay regular cash dividends. DTD is tilted towards large caps, but also includes exposure to mid caps and small caps.


Multi-Asset ETF Options

In addition to equity-only ETFs, there are several funds that invest in multiple asset classes with the objective of delivering a high level of current income to investors. Claymore offers both a domestic  and international multi-asset income fund with this objective, each of which invest in securities including:

  • U.S.-listed common stocks
  • American Depository Receipts (“ADRs”)
  • REITs
  • Master Limited Partnerships (“MLPs”)
  • Closed-end funds
  • Preferred stocks

The Claymore/Zacks Multi-Asset Income Index ETF (CVY) has gained about 38% so far in 2009, while the Claymore/Zacks International Multi-Asset Income Index ETF (HGI) is up almost 45% on the year.

Disclosure: No positions at time of writing.