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This posting features a comprehensive review of the established dividend ETF sector. In this view we feature those dividend related ETFs that have more conservative constituents and have been in existence for longer than a few years. There are dozens within the category with more on the way as current western demographics with an aging population gravitate to safer dividend and income sectors. To simplify matters for investors we’ve whittled choices down to 10. The issues chosen represent a broad cross section of domestic, global, overseas, real estate (REITs) and other sectors from a variety of sponsors. Doing so makes sorting through the sector more manageable for most investors.

Within each category we filter them by placing importance on high assets under management, liquidity and/or strategies that make a difference the most critical tests. Newer issues tied to new indexes with long (over 5 years) of historical data may be worth investigating, featuring and using as alternatives if necessary.

As equity market volatility has increased over the past two years we’ve noticed a large shift from conventional equity sectors to dividend and income sectors. This trend may continue or stabilize just due to demographics previously cited.

Remember just searching for the highest dividend yields can lead to troubled sectors where the ability to maintain the dividend may become questionable.

We rank the top 10 ETFs by our proprietary stars system as outlined below. If an ETF you’re interested in is not included but you’d like to know a ranking send an inquiry and we’ll attempt to satisfy your interest.

Strong established linked index

Excellent consistent performance and index tracking

Low fee structure

Strong portfolio suitability

Excellent liquidity

Established linked index even if “enhanced”

Good performance or more volatile if “enhanced” index

Average to higher fee structure

Good portfolio suitability or more active management if “enhanced” index

Decent liquidity

Enhanced or seasoned index

Less consistent performance and more volatile

Fees higher than average

Portfolio suitability would need more active trading

Average to below average liquidity

Index is new

Issue is new and needs seasoning

Fees are high

Portfolio suitability also needs seasoning

Liquidity below average

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues, preferring instead to buy when prices are perceived as a bargain and sell for other reasons when high; but, this is not our approach.

No. 1: SPDR Utilities Select Sector SPDR Fund (NYSEARCA:XLU)

XLU follows the Utilities Select Sector Index. This sector remains the historical first choice for investors seeking stable dividend income with the potential for long-term growth in value and increases in dividends. The fund was launched December 1998. The expense ratio is .20% AUM (Assets under Management) equal $7.2 billion and average daily trading volume is les than 10M shares. As of mid-December 2011 the annual dividend yield is 3.91% and YTD performance 15.03%.

XLU Top Ten Holdings and WeightingsData as of December, 2011.

  1. Southern Co (NYSE:SO): 8.76%
  2. Exelon Corp (NYSE:EXC): 6.95%
  3. Dominion Resources Inc (NYSE:D): 6.94%
  4. Duke Energy Corporation (NYSE:DUK): 5.93%
  5. NextEra Energy Inc (NYSE:NEE): 5.63%
  6. American Electric Power Co Inc (NYSE:AEP): 4.50%
  7. FirstEnergy Corp (NYSE:FE): 4.44%
  8. PG&E Corp (NYSE:PCG): 4.10%
  9. Consolidated Edison, Inc. (NYSE:ED): 4.03%
  10. Public Service Enterprise Group Inc (NYSE:PEG): 4.03%

No. 2: iShares Dow Jones Select Dividend ETF (NYSEARCA:DVY)

DVY follows the Dow Jones Dividend Select Index. The fund was launched in November 2003. The expense ratio is .40%. AUM equal $8.8 billion and average daily trading volume exceeds 1.8M shares. As of mid-December 2011 the annual dividend yield is 3.55% and YTD 8.72%.

DVY Top Ten Holdings and WeightingsData as of December, 2011.

  1. Lorillard, Inc. (NYSE:LO): 4.02%
  2. VF Corporation (NYSE:VFC): 2.66%
  3. Chevron Corp (NYSE:CVX): 2.28%
  4. Entergy Corp (NYSE:ETR): 2.15%
  5. Kimberly-Clark Corporation (NYSE:KMB): 1.94%
  6. Integrys Energy Group Inc (NYSE:TEG): 1.94%
  7. McDonald's Corporation (NYSE:MCD): 1.91%
  8. FirstEnergy Corp (FE): 1.81%
  9. ONEOK, Inc. (NYSE:OKE): 1.76%
  10. DTE Energy Holding Company (NYSE:DTE): 1.67%

No. 3: WisdomTree Total Dividend Fund ETF (NYSEARCA:DTD)

DTD follows the Wisdom Tree Dividend Index which is a fundamentally-weighted index that defines the dividend-paying portion of the U.S. stock market. The Index measures the performance of U.S. companies, listed on the NYSE, AMEX or Nasdaq Global Market, that pay regular cash dividends and that meet other liquidity and capitalization requirements established by WisdomTree. The fund was launched in June 2006. The expense ratio is .28%. AUM equal $200M and average daily trading volume exceeds 25K shares. As of mid-December 2011 the annual dividend yield was 3.40% and YTD return was 9%.

DTD Top Ten Holdings and WeightingsData as of December, 2011.

  1. AT&T Inc (NYSE:T): 3.93%
  2. Exxon Mobil Corporation (NYSE:XOM): 3.81%
  3. Chevron Corp (CVX): 2.73%
  4. Pfizer Inc (NYSE:PFE): 2.56%
  5. Johnson & Johnson (NYSE:JNJ): 2.41%
  6. Verizon Communications Inc (NYSE:VZ): 2.31%
  7. Philip Morris International, Inc. (NYSE:PM): 2.15%
  8. The Procter & Gamble Co (NYSE:PG): 2.14%
  9. Microsoft Corporation (NASDAQ:MSFT): 2.06%
  10. General Electric Co (NYSE:GE): 1.92%

No. 4: Guggenheim Multi-Asset Income ETF (NYSEARCA:CVY)

CVY follows the Zacks Multi-Asset Income Index which is designed to identify and track companies with high income and positive risk/reward characteristics. The fund was launched in September 2006. The expense ratio is .60%. AUM equal $420M and average daily trading volume exceeds 170 shares. As of mid-December 2011 the dividend yield is 5.29% and YTD return 5.73%.

CVY Top Ten Holdings and WeightingsData as of December, 2011.

  1. ConocoPhillips (NYSE:COP): 2.06%
  2. KLA-Tencor Corporation (NASDAQ:KLAC): 1.27%
  3. Boardwalk Pipeline Partners LP (NYSE:BWP): 1.24%
  4. Intel Corp (NASDAQ:INTC): 1.21%
  5. Wells Fargo & Co, San Francisco Ca Pfd: 1.11%
  6. Eaton Vance Limited Duration Income: 1.09%
  7. Total SA ADR (NYSE:TOT): 1.06%
  8. Royal Dutch Shell PLC ADR B (NYSE:RDS.B): 1.06%
  9. Northrop Grumman Corp (NYSE:NOC): 1.05%
  10. Vodafone Group PLC ADR (NASDAQ:VOD): 1.05%

No. 5: WisdomTree High Yielding Equity ETF (NYSEARCA:DHS)

DHS follows the Wisdom Tree Equity Income Index which is a fundamentally weighted index measuring the performance of companies with high dividend yields selected from the WisdomTree Dividend Index. At the index measurement date, companies within the WisdomTree Dividend Index with market capitalizations of at least $200 million and average daily trading volumes of at least $200,000 for the prior three months are ranked by dividend yield. The fund was launched in June 2006. The expense ratio is .38%. AUM equal $317M and average daily trading volume is over 90K shares. As of mid-December 2011 the annual dividend yield was 3.91% and YTD return was 10.53%.

DHS Top Ten Holdings and WeightingsData as of December, 2011.

  1. AT&T Inc (T): 7.51%
  2. Chevron Corp (CVX): 5.20%
  3. Pfizer Inc (PFE): 4.88%
  4. Johnson & Johnson (JNJ): 4.58%
  5. Verizon Communications Inc (VZ): 4.42%
  6. Philip Morris International, Inc. (PM): 4.10%
  7. The Procter & Gamble Co (PG): 4.07%
  8. Intel Corp (INTC): 3.48%
  9. Merck & Co Inc (NYSE:MRK): 3.31%
  10. Altria Group Inc. (NYSE:MO): 2.65%

No, 6: WisdomTree Dividend ex-Financials ETF (NYSEARCA:DTN)

DTN index measures the performance of high dividend-yielding stocks outside the financial sector. The index consists primarily of large- and mid-capitalization companies listed on major U.S. stock exchanges that pass WisdomTree Investments market capitalization, liquidity and selection requirements. The fund was launched in June 2006. The expense ratio is .38%. AUM equal $892M and average daily trading volume is over 215K shares. As of mid-December 2011 the annual dividend yield was 3.40% and YTD return was 9.01%.

DTN Top Ten Holdings and WeightingsData as of December, 2011.

  1. CenturyLink Inc (NYSE:CTL): 2.52%
  2. FirstEnergy Corp (FE): 2.26%
  3. Lorillard, Inc. (LO): 2.19%
  4. Reynolds American Inc (NYSE:RAI): 2.18%
  5. NiSource Inc (NYSE:NI): 2.05%
  6. Altria Group Inc. (MO): 2.03%
  7. Progress Energy, Inc. (NYSE:PGN): 1.96%
  8. Windstream Corp (NASDAQ:WIN): 1.89%
  9. Verizon Communications Inc (VZ): 1.87%
  10. Duke Energy Corporation (DUK): 1.87%

No. 7: Vanguard Dividend Appreciation ETF (NYSEARCA:VIG)

VIG follows the Broad Dividend Achievers Index which features constituent companies with a history of increasing dividends. It was launched in April 2004. The expense ratio is .18%. AUM equals $8.5 billion and an average daily trading volume of 1.3M shares. As of mid-December the annual dividend yield is 3.55% and YTD return 8.72%.

An alternative consideration would be VYM (Vanguard High Dividend Yield ETF). It follows the FTSE High Dividend Yield Index which consists of large-cap issues from global companies ex-REITs. The fund was launched in November 2006. The expense ratio is .18%. AUM equals $2.2 billion and average daily trading volume is roughly 439K shares. As of mid-December 2011 the annual dividend yield is 2.88% and YTD return 7.90%.

VIG Top Ten Holdings and WeightingsData as of December, 2011.

  1. McDonald's Corporation (MCD): 4.35%
  2. Chevron Corp (CVX): 4.16%
  3. ConocoPhillips (COP): 4.15%
  4. PepsiCo Inc (NYSE:PEP): 4.12%
  5. The Coca-Cola Co (NYSE:KO): 4.11%
  6. United Technologies Corp (NYSE:UTX): 4.11%
  7. International Business Machines Corp (NYSE:IBM): 4.08%
  8. Exxon Mobil Corporation (XOM): 3.90%
  9. The Procter & Gamble Co (PG): 3.80%
  10. 3M Co (NYSE:MMM): 3.61%

#8: First Trust Morningstar Dividend Leaders ETF (NYSEARCA:FDL)

FDL follows a modified market capitalization weighted index of publicly traded companies that have shown dividend consistency and dividend sustainability. Morningstar identifies a universe of eligible companies through the application of its proprietary multi-step screening process and selects the top 100 stocks, based on dividend yield, for the index. The fund was launched in March 2006. The expense ratio is .45%. AUM equal over $300M and average daily trading volume is over 300K shares. As of mid-December 2011 the annual dividend yield was 3.60% and YTD return was 10.41%.

FDL Top Ten Holdings and WeightingsData as of December, 2011.

  1. AT&T Inc (T): 10.02%
  2. Verizon Communications Inc (VZ): 9.18%
  3. Johnson & Johnson (JNJ): 9.03%
  4. Merck & Co Inc (MRK): 7.74%
  5. ConocoPhillips (COP): 5.45%
  6. Abbott Laboratories (NYSE:ABT): 4.80%
  7. Bristol-Myers Squibb Company (NYSE:BMY): 3.87%
  8. Eli Lilly and Company (NYSE:LLY): 3.11%
  9. Kraft Foods Inc (KFT): 2.96%
  10. Southern Co (SO): 2.60%

No. 9: Vanguard Real Estate ETF (NYSEARCA:VNQ)

VNQ follows the MSCI U.S. REIT Index which is a benchmark of U.S. property trusts that covers about two-thirds of the value of the entire U.S. REIT market. The fund was launched in September 2004. The expense ratio is .12%. AUM equal $9.2 billion and average daily trading volume is 1.8M shares. As of mid-December 2011 the annual dividend is $1.08 making the current yield was 3.63% and YTD return 4.37%.

IYR (iShares Dow Jones U.S. Real Estate ETF) follows the index of the same name. Risks for the sector are higher due to most assets consist of REITs (Real Estate Investment Trusts) which are much more volatile and economically sensitive. It’s said that over the next five years REITs have $3 trillion in outstanding debts due or refinance. The fund was launched in June 2000. The expense ratio is .48%. AUM equal $3 billion while average daily trading volume is nearly 9M shares. As of mid-December 2011 the annual dividend yield is 4.01% and YTD 1.87%.

Data as of December 2011VNQ Top Ten Holdings and Weightings.

  1. Simon Property Group Inc (NYSE:SPG): 9.41%
  2. Equity Residential (NYSE:EQR): 4.88%
  3. Public Storage (NYSE:PSA): 4.53%
  4. ProLogis Inc (NYSE:PLD): 4.50%
  5. Vornado Realty Trust Shs of Benef Int (NYSE:VNO): 4.26%
  6. Boston Properties Inc (NYSE:BXP): 4.19%
  7. HCP Inc (NYSE:HCP): 4.07%
  8. Host Hotels & Resorts Inc (NYSE:HST): 3.19%
  9. AvalonBay Communities Inc (NYSE:AVB): 3.06%
  10. Health Care REIT, Inc. (NYSE:HCN): 2.49%

#10: SPDR Dow Jones International Real Estate ETF (NYSEARCA:RWX)

RWX is the Dow Jones Global ex-U.S. Real Estate Securities Index which basically consists of REITs in developed and emerging markets. It was launched in December 2006. AUM equal $2.2 billion while average daily trading volume is over 443K shares. As of mid-December 2011 the annual dividend is $2.94 making the current yield 10.43% and YTD return -12.45%. The poor performance is the result of chaos overseas particularly within the eurozone.

RWX Top Ten Holdings and WeightingsData as of December, 2011.

  1. Unibail-Rodamco SE (NYSE:UL): 6.83%
  2. Westfield Group (NASDAQ:WDC): 6.45%
  3. Brookfield Asset Management, Inc. (NYSE:BAM): 6.03%
  4. Mitsui Fudosan Co., Ltd. (8801): 5.55%
  5. Land Securities Group PLC (NASDAQ:LAND): 3.14%
  6. Hang Lung Properties Ltd. (00101): 3.06%
  7. Westfield Retail Trust (WRT): 2.90%
  8. Link Real Estate Investment Trust (00823): 2.87%
  9. Dz Bk Ag ([Wts/Rts]): 2.71%
  10. Hongkong Land Holdings Ltd. (H78): 2.44%

It’s also important to remember that ETF sponsors have their own competitive business interests when issuing products which may not necessarily align with your investment needs. New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab’s ETFs and Scottrade’s Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned.

More from ETF Digest

Source: Top 10 Established Dividend ETFs