As investors search for defensive stock investments and high dividend yields during the current bear market turmoil, they need look no further than telecom services companies.
In contrast to many of the existing telecom ETFs (the four listed below are all down by about 40% on average in the last year) which have large positions in Verizon (NYSE:VZ
) and AT&T (NYSE:T
), the ETF Innovators (ETFI) Global Telco Dividend Income Index is structured as an equally-weighted, all-world index among the top 35 rated companies, which are rebalanced each quarter.
The accompanying table includes statistics for the index, along with the Top 10 rated companies.
1.) Telecom HOLDRs (NYSEARCA:TTH
) has over 80% invested in T + VZ with $143M in net assets
2.) iShares Dow Jones U.S. Telecom (BATS:IYZ
) has over 37% invested in T + VZ with $377M in net assets
3.) Vanguard Telecom Services (NYSEARCA:VOX-OLD
) has over 39% invested in T + VZ with $94M in net assets
4.) iShares S&P Global Telecom (NYSEARCA:IXP
) has over 23% invested in T + VZ with $181M in net assets, in addition to about 20% invested in Vodafone (NASDAQ:VOD
) + Telefonica (NYSE:TEF
A total of 71 companies are eligible for the ETFI Global Telco Services Dividend Income Index, which includes companies with market caps over $1B (USD) and dividend yields of at least 2.4% that derive the majority of their revenues from telecom services.
As shown in the accompanying table, the performance of the top 35 rated companies included a total return over the past year of -4.7%, compared to losses of 36%-52% for the five telecom benchmark funds already on the market, with the Emerging Markets Telecom Fund (ETF) getting hit the hardest with a loss of 52% in the past year.