Dividend ETFs Are Looking Attractive

Despite an impressive market rally that has major indexes up around 65% off the March 9 lows, there are still a number of blue-chip stocks delivering handsome dividend yields. ETFs can give a diversified play.

Yields upwards of 3% are being offered by some well-known names, including Kraft Foods (NYSE: KFT), Clorox (NYSE: CLX), Sara Lee (SLE), Sysco (NYSE: SYY), Johnson & Johnson (NYSE: JNJ) and Verizon (NYSE: VZ).

Finding these names is a matter of doing a little detective work. One clue is “value” stocks. Because they’re generally more stable, they can be a better long-term investment, explains Brett Arends for Yahoo Finance. Defensive industries include food and beverage, health care, personal care, household goods and telecommunications.

Arends cautions investors to beware dividends that are too high – one in the double digits can be a red flag because it means the market expects the payout to be cut or that the business is being wound down.

Top dividend stocks are appealing to investors who seek something other than bonds, and also yield some extra income. But why single-stock pick? Instead, you can own a basket of these handsomely yielding companies in one ETF. ETFs will also help spread your risk around, especially if more volatile companies are held within the fund alongside the more stable, defensive ones.

• iShares Dow Jones Select Dividend (NYSEArca: DVY): up 8.5% year-to-date; yields 4.4%

• PowerShares International Dividend Achievers (NYSEArca: PID): up 36.5% year-to-date; yields 2.4%

• WisdomTree Dividend ex-Financials (NYSEArca: DTN): up 21% year-to-date; yields 4.1%

Comments

[mbkelly75]

Thank you for your article and the work you do here. These might be a good idea for someone who does not have enough time to pay attention to the individual stocks and the ones with better than 3% yields are worth looking at.
I have the time and skills to study the individual stocks and my balanced portfolio shows the results. It is currently giving an annual yield of 6.68% - better than any of these by a wide margin.

2009 Nov 26 09:58 AM

[oldman]

DEc 2008 to March 2009 didn't help bond ETF's, did they?

2009 Nov 27 10:19 AM