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There are a couple of Exchange Traded Funds, or ETFs, which go up when the stock market drops, and on top of that, they pay a dividend. These ETFs could be an interesting way of hedging your portfolio.

One of the ETFs is UltraShort Utilities ProShares (NYSEARCA:SDP), which utilizes futures contracts, options, forward contracts, swap agreements and similar instruments to seek a return that is twice the inverse of the daily performance of the Dow Jones U.S. Utilities index for a single day. This means that when utilities drop, this ETF should increase in price.

SDP pays a small yield of 0.31%, with dividends being paid since June 2007. A large portion of the dividend payouts are generally due to capital gains. Although payments were made in June and December of last year, there is no guarantee that dividends will be paid in the future.

The performance for last year was down, primarily because of the strong move in utilities and stocks in general since March of last year. However, it has far outperformed the bear market category year-to-date, for 3 months, one year, and 3 years. If you consider investing in this type of ETF, remember that it is designed to provide a return on a daily basis, not long term, and not for income.

Another bearish ETF which pays a dividend is UltraShort Telecommunications ProShares (NYSEARCA:TLL), which has a yield of 0.47% based on its latest dividend payment. It attempts to achieve twice the inverse of the daily performance of the Dow Jones U.S. Select Telecommunications index, in other words, twice the opposite return of telecom stocks. This ETF doesn't have as long a dividend track record as SDP and it has outperformed the Bear Market Index for one month, year-to-date, and one year.

If you like bearish ETFs, you can get a free list of Short ETFs at WallStreetNewsNetwork.com.

Disclosure: Author does not own any of the above.