Yield, Total Return And Volatility Of The Top 10 Dividend ETFs Ranked By Assets

by: Richard Shaw

Dividend income is increasingly popular in a yield starved world. Dividend ETFs are the choice for many to access dividend stocks.

Here are the 10 most popular dividend ETFs as ranked by total assets.

The tables in this article compare the assets, yield, expense ratio, rolling short-term total return, and total return for recent calendar years for the 10 most popular U.S. domestic stock dividend ETFs.

The next chart presents yield in four gold shaded columns, highlighting one of the dilemmas faced by equity investors - determining the actual yield.

The first challenge is to ascertain which form of yield the reporting source is using. That sounds easy, but they do not all report on the same basis, and database sources often have conflicting numbers.

Three common forms are 12-month trailing yield (also called distribution yield), annualized yield (sometimes called current or indicated yield), and SEC yield (the last 30-days of distribution divided by price).

The second problem is the "as of" date - some sources use quite current data, and some use fixed dates such as last month-end. Prices change a lot and therefore, so do yields.

The third problem, may also be data errors. Most information you find, other than at sponsor sites, is purchased in a data package from somebody else, and they may have purchased from yet another; and they may purchase from multiple source that don't have completely consistent data.

Don't take just the first yield you see to be true. You need to look closely before making a final decision on yield matters. The best thing to do is to add up the actual distributions yourself, and divide by the price to have at least one rock hard number.

In this table we gathered the reported yield for the top 10 dividend ETFs from four sources: The ETF site, ETFdb, Schwab and Fidelity. The scatter on the data is substantial.

Databases are good and necessary, but in the end, verify on your own before putting your nickel down on a stock or fund.

Click images to enlarge

This next chart presents the one-week, one-month, three-month and one-year total return for each fund (according to Morningstar).

The share of gross return that went to expenses is all over the lot, however the lowest expenses are not always the best choice. On the other hand, it's good to control what you can, and avoiding the highest expenses may pay off in the long run. It paid here in the short run.

This chart of calendar year total returns for the past four years gives a view of how the funds did in the 2008 crash year, as well as the recovery years thereafter. SDY, representing the S&P 500 Dividend Aristocrats had the smallest decline in 2008.

Then, there is the question of the return you get for the ride (volatility) you take. If the ride is so rough that you get off, you cannot achieve the return.

So, it is good to look at how much fluctuation you might expect, not just the cumulative return you get by enduring the ride.

Here are the three-year total returns and standard deviations for the top 10 dividend ETFs. The column labeled TR/SD is the ratio of the three-year return to the three-year standard deviation.

DTN (Wisdom Tree Dividend ex Financials) gave the best ride, and the best return over three years.

One of the high expense ETFs (FVD - First Trust Value Line Dividend) gave the second best ride, and a return similar to most of the other ETFs. It also had one of the better 2008 returns.

We have owned DVY, VIG, SDY or VYM at times, but do not now, and generally prefer to own selected stocks that tend to be underlying holdings of dividend ETFs.

Mentioned Securities: DVY, VIG, SDY, VYM, DTN, HDV, FDL, DHS, FVD, PEY

Disclosure: QVM does not own any mentioned security as of the creation date of this article (January 20, 2012).

Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.