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Jim Trippon
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Jim Trippon is an Amazon.com bestselling business and finance author, a practicing CPA, and a fee based investment advisor. His portfolio of companies includes J.M. Trippon & Company CPA, Trippon Wealth Management & Trippon Financial Publishing. Jim has dedicated his business career to... More
My company:
Trippon Financial Research, Inc.
My blog:
Global Profit$ Alert
My book:
Stay Rich Forever: Retirement Planning Secrets of Millionaires and How They Can Work For You!
  • Want Some Income? There's An ETF For That 0 comments
    Jul 30, 2010 11:35 AM | about stocks: DVY, VIG, SDY
    Just one more reason to like ETFs: You can tap into this asset for the purposes of generating income and capturing yield for your portfolio. And you thought I was over-exaggerating a while back when I said ETFs have something for everyone! In fact, there are dozens of ETFs that offer investors exposure to dividends while paying robust yields. That's the good news, but I've got a bone to pick with the way income ETFs are presented to investors.Here's my deal: I enjoy writing these messages and I want you to enjoy reading them. One I try to increase the enjoyment factor is by telling you about ETFs you may not already know about.

    The bottom line is there are plenty of dividend ETFs you don't need me to tell you about. You may have already heard about the iShares Dow Jones Select Dividend Index Fund (NYSE: DVY), which has a decent yield of nearly 4%. DVY is loaded with familiar blue chip names. Along the same lines is my preferred pick for conservative investors that want exposure to a huge amount of dividend payers: The Vanguard Dividend Appreciation ETF (NYSE: VIG). Another "mainstream" option is the SPDR S&P Dividend ETF (NYSE: SDY).

    SDY tracks the S&P Dividend Aristocrats High Yield Index, but the problem here is that the index only adds and subtracts components once a year, meaning you could be owning SDY while some of its constituents cut or suspend their dividends and be stuck holding the bag until those laggards are removed from the index. That doesn't sound like an inviting proposition, does it?

    You see, dividend ETFs are different from other ETFs. What I mean is that the point of buying a dividend stock or ETF is to generate some income via the dividend and yield. In other words, you should be buying a dividend ETF with the intent of it being a longer-term trade. So this is one case where obscure, low-volume ETFs can work to your advantage. May caveat there is make sure the ETF has more than $50 million in assets under management if the volume is light because weak volume combined with paltry assets is an engraved invitation to the ETF graveyard in many cases.

    Let me put this another way: If you attend one of our Global Profits Alerts investing seminars and tell me that you're considering purchasing shares in a low-volume emerging markets ETF for which a high volume alternative exists, I'll talk you out of that purchase. If you tell me you're looking at a low volume dividend ETF, as long as the assets are there, I'll say go ahead.

    Now let me tell you about some the high-yielding ETFs that aren't consistently splashed across the headlines, but that are on my personal watch list. And by that I mean we're thinking about adding them or have already added them to the ETF Profit Report portfolio.

    Dividend ETF #1: Small-Caps And Emerging Markets TOGETHER

    What if I told you about an ETF that combines the allure of emerging markets small-caps with a decent yield of 3%. This ETF is just starting to garner some bullish press, but it's one of our favorites at ETF Profit Report. With this ETF, you'll get exposure to strong emerging markets like Taiwan, South Korea and Thailand. The volume is decent at over 125,000 shares per day and it has almost $290 million in assets under management, so this ETF isn't going anywhere. While enjoying the 3% yield, our subscribers have also reveled in capital appreciation of 11% in the past month.

    Want Some Income? There

    Dividend ETF #2: Tapping Into The Canadian Oil Sands

    This is an intriguing ETF that yields 4% and hardly gets any notice. It's a play on the Canadian oil sands region of western Canada, which is believed to be home the second-largest oil reserves in the world behind Saudi Arabia. This ETF moves with oil prices to some extent, but when natural gas prices pop, the ETF shifts its allocation to increase exposure to natural gas, providing investors with an avenue to make money on bullishness in either of both of the aforementioned commodities.

    Dividend ETF #3: The Preferred Way To Play Preferreds

    Preferred stocks are among the best avenues for income investors to harness reliable dividends along with spectacular yields, but preferred issues aren't very liquid compared to traditional common stocks, so they don't get a lot of press. The great thing about preferred stocks is the issuer almost always makes good on its dividend commitment because the issuer's credit rating hangs in the balance. Professional money managers love preferred stocks and you should, too, but the best way for individual investors to get involved with preferred stocks is with ETFs and I know about an ETF focused exclusively on preferreds with a yield of almost 8% that I would love to tell you more about in the ETF Profit Report.

    One positive aspect of 2010's topsy turvy market setting has been the return of the dividend and more dividend increases are on the way. You can take that to the bank and you can do that with dividend ETFs.

    Best Wishes,

    Jim Trippon

     

    For more information and archived issues, visit http://www.globalprofitsalert.com

    Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Todd Shriber, Kelley Damiani and J. Daryl Thompson.

    Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph:

    This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com



    Disclosure: no positions
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