As Americans grumble and grimace over the poor returns from fixed income, the economy continues to flex its injured muscles with greater ease at the prospect of low interest rates. With the Fed promising to keep interest rates “exceptionally low” until mid-2013, Treasury holders and individuals with savings accounts alike have already seen a steady slump in their income flows. Perhaps intentioned by the Fed, but certainly a byproduct of the plan itself, low interest rates are likely to drive investors to seek yield elsewhere.
Investors looking for a diversified dividend fund might be disappointed by the more popular ETFs available. The iShares Dow Jones Select Dividend Index ETF (DVY), for instance, offers its investors a mere 3.49% yield, which seems marginally significant when contrasted against 1.96% yield already baked into the SPDR S&P 500 (SPY), which replicates the performance of the broadly followed S&P 500.
Those willing to create their own high-yield dividend portfolios might do well to individually select their own holdings from a list of high-paying companies. However, it is important to bear in mind that commissions can add up, and adding more capital to these positions at a later date would incur another round of commissions for each added position. A diversified portfolio, such as the one that follows, therefore might do well for investors who have longer-term outlooks and who are looking to reap income flows from a stationary capital investment.
|AT&T (T)||180.3B||5.8%||Telecom Services|
|Total SA (TOT)||117.8B||5.4%||Oil & Gas|
|Exelon (EXC)||27.4B||5.0%||Diversified Utilities|
|Southern Copper (SCCO)||26.5B||9.3%||Copper|
|Sun Life Financial (SLF)||11.2B||7.5%||Life Insurance|
|Annaly Capital Mngmt (NLY)||15.6B||14.3%||Mortgage REIT|
|Altria Group (MO)||58.4B||5.7%||Cigarettes & Wine|
All the companies above offer a dividend yield greater than 5% and have a market capitalization greater than $10 billion. Screened for higher market caps, these companies are likely to endure shocks within their sectors better than their small cap peers. Spread throughout several stable industries, this selection of companies offers a diversified approach and additional protection in a hard hit market.