High Yield Bond ETF: If We Avoid a Full-Blown Depression, It's a Steal

| About: iShares iBoxx (HYG)

The iShares iBoxx High Yield Corporate Bond ETF (HYG) has been showing impressive performance on many fronts and may very well continue to reward investors that are early to the party quite handsomely. Not only has it outperformed the S&P 500, but its dividend yield is significantly higher, at 12% vs 3.3% for the S&P 500. Many economists have been touting how corporate and municipal bonds are trading at Depression scenario prices and anyone believing that we're not headed for a repeated disaster should be snatching up shares now.

A look at the top 10 holdings: it's refreshing to see the the ETF isn't comprised primarily of Financials, which is what dealt a death blow to many high yield stock ETFs.

Chs / Cmnty Health Sys 8.875%
Davita 7.25%
Dollar Gen 10.625%
Intelsat 11.25%
L-3 Comms 6.375%
Peabody Engy 7.375%
Windstream 8.625%

Monthly Dividends: as shown below, the ETF pays dividends monthly and for the most part, the trend has been continually higher, even in the face of a decline in share value and the global market tumult.

1-Apr-09 $ 0.806 Dividend
2-Mar-09 $ 0.719 Dividend
2-Feb-09 $ 0.753 Dividend
29-Dec-08 $ 0.524 Dividend
1-Dec-08 $ 0.698 Dividend
3-Nov-08 $ 0.69 Dividend
1-Oct-08 $ 0.69 Dividend
2-Sep-08 $ 0.62 Dividend
1-Aug-08 $ 0.663 Dividend
1-Jul-08 $ 0.651 Dividend
2-Jun-08 $ 0.634 Dividend

So, investors faced with the prospect of trying to get an 8-11% yield on Advanta's high yield investment notes (albeit with their own set of risks) vs. what's remaining from the 37 High Yield MegaCaps List vs. a high yield corporate bond ETF such as HYG with the aforementioned accouterments demonstrate that this market is offering various means of achieving double digit returns over long periods of time with the right risk tolerance.

Disclosure: No current position in HYG, but considering for high yield IRA account in the future.