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As interest rates have continued to decline, many people have started looking elsewhere for income, whether it is for retirement or rainy days. However, many people are unsure of where to even start looking, while others have ideas, but quickly become lost in all of the options. One of the best ways to solve this issue is to find a high quality ETF that invests in dividend-yielding stocks.

As a result of being a basket of assets, ETFs are a great way to provide a good level of diversification for many investors, as it can take several thousand dollars to buy the stocks or assets in an ETF outside of that ETF; however, with an ETF, you can invest in everything for a fraction of the price. This and when you look at dividend ETFs, you can earn income, find strong dividend stocks, and diversify your portfolio -- a dividend paying ETF may just be what you need to get more sleep at night.

In addition to these benefits of ETFs, dividend stocks have great benefits as well. On top of growth of the company and the stock price, these companies pay out a portion of earnings to investors in the form of a dividend. Many companies, including Apple (AAPL), McDonald's (MCD), and Johnson & Johnson (JNJ) pay dividends, adding an additional perk for investors.

Together, dividends and ETFs provide a great investment combination. With a little bit of background, let's now talk about a few ETFs consisting of dividend stocks, each of which serves a different purpose: the SPDR S&P Dividend ETF (SDY), Powershares International Dividend Achievers Portfolio (PID), and the WisdomTree Emerging Markets SmallCap Dividend Fund (DGS).

SPDR S&P Dividend ETF

The SPDR S&P Dividend ETF follows the S&P High Yield Dividend Aristocrats Index, which seeks to track companies in the S&P 1500 that have increased dividends for at least 20 years while also meeting other liquidity and value requirements. The key factor here is the history of dividend increases, which is a great way to spot a high-quality dividend stock. With a history of increasing dividends over 20 years (in good times and bad), you can be fairly confident that these companies will continue this trend and emphasis on dividends for shareholders. Additionally, with investments all in the S&P 1500, there are many well-known companies can can provide a strong basis for any portfolio, including Avon Products Inc. (AVP), Pitney Bowes (PBI), AT&T (T), and Johnson & Johnson. SDY is currently yielding just over 3% and trading around $60/share.

For those who are new to dividend investments, or have a smaller portfolio overall, SDY is a great way to invest in high-quality dividend-paying companies while also remaining diversified.

Powershares International Dividend Achievers Portfolio

For those looking for international exposure and large companies, the Powershares International Dividend Achievers Portfolio follows the International Dividend Achievers Index (it invests around 90% of its assets in investments in this index), which is an international dividend index. The holdings in this fund are much more diversified globally, and it provides international exposure as well as dividend income: 45% of its exposure is in Europe, 40% is in the Americas, and 15% is in greater Asia. Similar to SDY, it is currently yielding about 3% (although it trades at around $15/share). Some of its top holdings include Telefonica SA ADR (TEF), Teekay LNG Partners (TGP), AstraZeneca PLC ADR (AZN), Corpbanca SA ADR (BCA), and Vodafone Group ADR (VOD), with 83.42% of the assets in large cap companies.

While PID is definitely the most unique ETF discussed here, it is likely also the most intriguing. As many investors may already be aware of, and invested in, a variety of dividend stocks (or perhaps even a dividend ETF), PID provides a new angle on the current dividend craze. Through its combination of international exposure and dividend focus, PID serves to provide a new area of diversification and fill a potential hole in many portfolios. And while many of these companies may not be as well known, it is a great option for those seeking international diversity along with income.

WisdomTree Emerging Markets SmallCap Dividend Fund

Finally, for anyone seeking something more diverse and unique (or for those who already have exposure to large global companies, the WisdomTree Emerging Markets SmallCap Dividend Fund follows the WisdomTree Emerging Markets SmallCap Dividend Index, which is based on the WisdomTree Emerging Markets Dividend Index. The Small Cap index (on which this ETF is based), invests in the companies that fall in the bottom 10% of total market capitalization of the broader index. This ETF is great for investors looking to diversify an already fairly diverse portfolio and who are seeking emerging market exposure and smaller companies. One important aspect of both emerging markets and small companies is that they have a higher risk/reward potential; although they are smaller and not as well established, they also have more growth potential.

DGS is currently trading at about $48/share and yielding over 3%. Its top holdings are (be warned, you will likely not be familiar with any of these companies) Tauron Polska Energia SA, Tofas Turk Otomobil Fabrikasi, and Ulker Biskuvi Sanayi AS (OTCPK:UELKY), while its top geographic regions are Taiwan, South Korea, and Thailand. While this ETF can serve an important role in many portfolios, it may be best suited for larger portfolios that are already well diversified in key areas and investors who are looking for new ideas and even more diversification.

Takeaway

These three ETFs provide only a glimpse of many dividend-yielding ETFs -- a simple Google search will yield dozens more with a variety of goals and objectives. Although the wealth of options may seem daunting, with interest rates close to zero and likely to stay at these levels in the coming years, dividend ETFs provide a great way to find diversified income. And with the ability to find and invest in dividend ETFs that focus on a certain industry, market, or country, you can be as specific or broad as you want, depending on your current portfolio, goals, and needs.

Source: ETF Quick Picks: Dividends And Diversification