The story of the Euro-zone debt crisis continues in 2013 with the slowing of emerging markets alongside with it. Therefore investing in foreign stocks and ETFS could prove risky as it was seen in the financial year 2012 and at the same time, investors are hardly receiving any value in terms of price growth. This arises in the investor an expectation for regular income sources, broader market products such as index controlled highest paying dividend funds are giving monthly pay-outs and are a definite scope for regular income for investors, who are unhappy with the current interest rates and bond yields but still are not willing to take a higher risk. ETFs abound to the growth of Solactive Global Super Dividend Index have delivered yields between 6-7.5% through an equity-bank that has the 100 top most yielding International stocks with large market capitals and healthy balance sheets.
The news on United States reserves keeping the interest rates low for the entire 2014 year has sparked interest in stockholders and investors to view dividend sharing ETFS as a feasible option to generate a steady income.
Further the Fiscal cliff deal renders an excellent update for the dividend stocks such that the dividends are taxed as kindly as capital gains and more sympathetically than interest.
In the list of high income ETFS,most follow the Solactive benchmark; Global Super Dividend Index. Heaviest sectors include Financials, Telecom and REITS (all of these accounting for half of this set) and it has a basket of equally weighted 100 companies/securities (of which one third are United States based). The technique of assigning 1% to each of the 100 stocks evades chances of a fall in the product as a whole when one or two companies in the portfolio experience a down fall. Portfolio spectrum is well spread not only in terms of sectors but is also diversified across nations, Australia, behind USA, takes the second spot owing to its relaxed tax treatment towards dividends followed by United Kingdom.
The common terms that you should know before venturing into this super asset class may include:
Thirty-day SEC Yield: It represents the interest procured by an investor after expenses during the most recent duration.
Twelve Month Dividend Yield is the net yield received by an investor during at least 12 months of his engagement with the fund.
Distribution Yield can be calculated by first annualizing the most recent 30 Day SEC Yield and then dividing it by the concurrent Net Asset Value of the ETF.
There is more to this ETF, it pays monthly dividends. Thus proving to be a boon to all those aiming to build a portfolio that would provide for a strong supply during retirement years and beyond and on the whole monthly dividends (as an advance technique) assure investors of frequent rewards and genuine projections. Higher the dividend pay-out sums up to - lower volatility of the stock and (this routine) brings a wave of discipline to the company. Although some country specific products on Singapore and Australia are available, but they lose sheen to their fairer cousins that are pure plays on the Solactive parameter and has bestowed yields upwards of 7% for the gone year. Individuals aiming to enhance their retirement planning, or the ones simply wanting to diversify through a regular payout scheme must take a closer look at this class which along with a superb monthly yield, may arguably offer a long term value growth as well.
Global X SDIV ETF is among the Highest Yield ETF due to its SEC yield of 7.7% and a trailing 12 month return of about 7.9% after annual expenses that are charged at 58 basis points. 21% of the asset pool for SDIV fund includes Polska Miedz, Navitas Ltd. and Standard Life PLC among the other heavyweights and the product even has a sizable devotion of 31% to small cap and micro stocks.