Of course, many high yielding asset classes come with considerable risk, and considering only the return opportunity could be a foolish move in the current environment. To put all the high yielding opportunities out there on equal footing, we compared both distribution yield over the past 12 months and volatility during the past 200 trading days — rough approximations for return and risk profiles [Download How to Pick The Right ETF Every Time].
Specifically, we:
- Took approximately 80 ETFs (and ETNs) from high yielding asset classes, including dividend paying stocks, junk bonds, MLPs, and preferred stocks
- Used the ETF Analyzer to generate 12 month dividend yield and 200 day volatility for each
- Calculated dividend yield as a percentage of volatility–basically, the yield offered relative to the risk incurred
The results were all over the board, as can be expected in a somewhat turbulent environment (it should be noted that these figures change daily, and are inherently backward looking). But some interesting trends emerged from this analysis, highlighting a few ETFs that offer up attractive yields relative to the volatility (i.e., risk) they come with [see also Monthly Dividend ETFdb Portfolio]. [click to continue…]
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