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Since last summer's market turmoil, investors have been moving into positions that are more conservative and protective in nature. It should be no surprise that this has encouraged investors to take an interest in mutual funds and stocks with high dividend yields as a common strategy. When markets start to enter into a bearish phase and momentum in equity markets is expected to slow, investors tend to look for stocks which have historically paid consistent and high quality dividends as a means for improving total yearly returns.

For anyone without exposure to quality dividend yields, the inexpensive ETFs highlighted in this article should be a welcome consideration as a means for improving portfolio diversification and protecting against future market uncertainties. These exchange traded funds provide a quick and easy way to capitalize on companies with a dividend focus, as we all potential for growth relative to the overall performance of the S&P 500.

First, we will look at some of the most popular dividend EFTs, with the Vanguard Dividend Appreciation ETF VIG, iShares Dow Jones Select Dividend Index DVY, and the SPDR S&P Dividend ETF SDY. Each of these funds are comprised of more over $5 billion in assets and offer some of the best values for new investors looking to increase dividend exposure. Newer investors looking for inexpensive ETFs might look into the Vanguard fund first, with its 0.18% cost (easily the cheapest of the three funds) and offers a 2.1% yield and a 4.2% return over 5 years. These returns are lower than some of their small cap counterparts but have provided consistent dividend payouts on an historical basis.

For investors looking for exposure in emerging markets, we are now seeing a growing number of options when choosing foreign-owned companies with a steady dividend focus. In this area, the SPDR S&P International Dividend ETF DWX and the Power Shares International Dividend Fund PID are two attractive options. In both funds, foreign companies constitute roughly 15% of the portfolio.

As would normally be expected, costs for these funds are higher that what would be seen in most US-based funds (0.45% in the SPDR fund and 0.57%, in Power Shares) but these are still low-cost options relative to their most common counterparts. There are funds that focus on specific regions (such as Europe or the Middle East) but having a broader approach here can help increase protective exposure when regional shocks occur.

There are other choices as well, for investors seeking larger exposure to emerging markets, as the SPDR S&P Emerging Markets Dividend ETF EDIV and the Wisdom Tree Emerging Markets Income ETF DEM have turned in impressive results (DEM has produced a 10.6% annual return since the middle of 2007) but it should always be remembered that greater exposure to these markets will mean an exposure to greater volatility and price swings. Given the current stage of our market cycle, many investors are avoiding these markets for most steady and stable returns.

Source: Dividend ETF Options For New Investors