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Camari Ellis
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Camari Ellis is an portfolio manager who manages an ETF only portfolio. The use of macro economic, technical and fundamental analysis tools provide great clarity for researching investment opportunities for his clients. Camari holds a BA degree in finance from Temple University and resides in... More
My company:
StoneRidge Investments Partners
  • 10 Highest Dividend Yielding ETPs 1 comment
    Dec 2, 2010 2:07 PM | about stocks: REM, JNK, DRW, HYG, PHB, IFGL, PFF, PGF, PGX, GCE

    The November 29th issue of Barron’s featured a special on retirement income. As more and more baby boomers cross over the retirement threshold, the topic of income generating investments becomes more popular. When doing a Google search for “Retirement Income”, it produces almost 4 million results. Clearly, there is a plenty of information about retirement income, but here is another view to add to that list.


     

    On November 29th, the 10yr Treasury yield was 2.79%, so if an investor were to invest $100,000 in 10yr Treasury bonds the most income a retiree could expect is $2,790 annually. Currently, the Fed is more concerned with deflation then inflation. Unfortunately the Fed is only concerned about core inflation, which is CPI (inflation) minus food and energy prices. Historically, food and energy prices experience temporary price shocks, and these shocks can give a misleading impression of the overall direction of inflation. However, in today's environment, food prices are up drastically, with the expectation of further price appreciation, investors should look for opportunities to increase their purchasing power. So, I compiled a list of the 10 highest Dividend Yielding ETPs (Exchange Traded Products).

    10 Highest Dividend Yielding ETPs

    TickerNameGeographic Focus (Holdings Based)Industry Focus (Holdings Based)Inception DateTot Ret 1DTot Ret YtdTot Ret 1YDiv 12M Yld GrossBeta Avg Volume 30 Day
    REMISHARES FTSE NAREIT MORTGAGEUSMortgage/Reits5/4/20070.27%9.43%13.96%10.41%1.0551,546.00
    JNKSPDR BARCLAYS CAPITAL HIGHUSHigh Yield Corp Bonds11/28/20070.53%11.43%15.94%9.71%0.562,570,689.00
    DRWWISDOMTREE INTL REAL ES FDAsia PacificIntern'l REITs/Real Estate6/5/20070.53%9.60%12.14%9.15%0.9944,614.00
    HYGISHARES IBOXX H/Y CORP BONDUSHigh Yield Corp Bonds4/11/20070.26%8.61%12.98%8.46%0.58966,845.00
    PHBPOWERSHARES FNDMTL H/Y CORPUSHigh Yield Corp Bonds11/15/20070.22%7.99%12.14%7.91%0.6374,314.00
    IFGLISHARES FTSE EPRA/NAREIT DEVInternationalIntern'l REITs/Real Estate11/16/20070.10%8.85%11.51%7.47%148,466.00
    PFFISHARES S&P PREF STK INDX FNUSPreferred Stock3/30/2007-0.31%13.62%20.98%7.32%0.851,306,296.00
    PGFPOWERSHARES FIN PFD PORTFOLIGlobalPreferred Stock12/1/2006-0.89%15.76%23.95%7.23%0.94592,615.00
    PGXPOWERSHARES PREFERRED PORTUnited StatesPreferred Stock1/31/2008-0.07%12.04%16.66%6.99%0.84561,229.00
    GCECLAYMORE CEF GS CONNECT ETNN.A.High Div Closed End Funds12/10/2007-0.59%10.67%14.24%6.75%0.81,571.00
    Source: Bloomberg as of 11/29/10



    After reviewing the list, a few themes are clear. Most prevalent are high yield bonds which invests in bonds that are below investment grade, preferred stock which are equity securities that have properties of an equity and a bond, and real estate which consists of REITS and mortgage companies. The ETPs list has both US and international exposure.


    ---Returns


     

    Surprisingly, all of these ETPs have higher year to date (ytd) returns then the S&P 500 which has increased by 6.52% YTD. The average return for the top 10 is 10.8%, which is 4.28% above the index. The 12 month dividend yield for the S&P 500 is approximately 1.8%.Conversely, the average 12month dividend yield for the top 10 is 8.14%, which is 6.34% above the index.


    ---Beta


     

    Beta is a number describing the relationship of its returns with that of the Market (S&P 500) as a whole. A beta of 1 means the security will move lock step with the market, and a security with a beta of less then one means the security is less volatile then the market. A negative beta means the security moves in the opposite direction of market. On average these top 10 have a beta of .82, which means it is 18% less volatile then the overall market.


     

    In retrospect, an investor could have created an equal weight portfolio of the Top 10 dividend ETPs and would have received an 8.14% dividend yield, along with a return of 10.8% before taxes and commissions, plus the volatility the portfolio experienced should have been reduced by 18% in comparison with the overall market.



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Comments (1)
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  • Camari,

     

    I have a quick question, but slightly off the topic, I was wondering what is your take on the VIX in the coming 12 months? Should i be expecting a continuous downward movement?

     

    Barry

     

    Temple University
    The Owl Fund
    7 Dec 2010, 10:51 PM Reply Like
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