Yield Hunters Struggle

Those that have owned the Dow Jones Dividend Select ETF (DVY) over the last year know that dividend stocks have severely underperformed the overall market.  Below we highlight a chart comparing the price change of SPY and DVY since the start of 2006.  As shown, the two traded pretty much inline with each other until the credit crisis hit dividend-paying financial stocks last summer.  Investors looking for a nice yielding dividend ETF have gotten anything but that over the past year with DVY.

Comments

[truthinvesting:]

Companies like Kraft and Phillip Morris International UST and Altria US Bank and Wells Fargo combined in a basket will give you a nice mix of growth and dividend

2008 Jun 03 06:57 AM

[The Finance...:]

Fine with me - my quarterly reinvested dividend just buys more DVY shares at this level. It'll come back up, and when it does, I'll have a bigger piece of the pie.

2008 Jun 03 07:38 AM

[Everyday Fi...:]

I have yet to find a high yield fund or ETF that I'm completely pleased with. I've been managing my own ultra-high-yield portfolio, averaging 13% amongst high yielders in a tax advantaged self directed IRA. I just posted holdings last night; feel free to check out at EverydayFinance.

IMO - stock of the year - Frontline FRO

2008 Jun 03 08:38 AM

[bluesmoke:]

Everyday Finance - I checked out your website. I assume you have equal weightings for those stocks? I like the concept, but there is a higher risk as well.

2008 Jun 03 09:47 AM

[proseadvocate:]

Good article but could go further and explain the paradigm of yield and how it relates to risk overall. Indeed, the market doesn't trust bankers and that's why we demand the dividend. The fact is, they are diluting the shares and the yields won't last long.

2008 Jun 03 09:53 AM

[Everyday Fi...:]

Hi Bluesmoke,
My weightings are roughly equivalent and it would be more of a hassle than it's worth to break out by every dollar. The intent of publishing the holdings is so investors can follow and/or pick some of the top performers they like in the portfolio. Since I reinvest dividends each time I accumulate a few hundred dollars, etc., I figured it was more trouble than it was worth tracking to the dollar. Thanks for checking out; hope you enjoyed the read.

2008 Jun 03 10:58 AM

[jimsep:]

Interesting article and great graph, as usual.

Bespoke Group, is it time to do another table of country PEG ratios?

I keep hearing wags on TV talk about how cheap US stocks are, but are they really , relative to GNP?

2008 Jun 03 11:26 AM

[whisperonth...:]

I'm with Everyday Finance - I pick my own high yields, balance them with a couple financials (they WILL go back up), and a fund and a bond group, and I'm beating averages. I'm not in the same league, of course, but I'm coming out ahead and gathering dividends almost every week.

2008 Jun 03 06:50 PM

[whisperonth...:]

And FRO is way up there in my book. If they come down again, I'll just pick up a little more.

2008 Jun 03 06:51 PM

[truthinvesting:]

Some of the Mo shares I purchased in 2000 are yielding me over 20% from the purchase price. Grwoth companies like JNJ who rase their dividend every year combined with the tobacco's when they are priced right helped me retire at age 40.peace

2008 Jun 04 07:41 PM