Saturday, October 22, 2011

8 Dividend-Focused ETFs for Income and Hefty Yields

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tdp2664 InvestorPlace Dividend stocks always have been viewed as a safe haven for investors during volatile economic times because they can deliver income, long-term growth and a hedge against inflation. Lately, dividend-focused exchange-traded funds have grown in popularity because they provide greater diversification and fewer headaches picking individual stocks. Like all ETFs, dividend ETFs are comprised of a basket of equities that trades over an exchange just like a stock. Expenses typically are lower than those associated with mutual funds and can be an even better value if you use a low-cost broker. But dividend ETFs differ significantly, and performance can vary substantially based on the fund's strategy. Dividend ETFs tend to fall into two broad categories: dividend growth ETFs and high dividend yield ETFs — and the similarities between these two types of funds pretty much ends with the words "dividend" and "ETF.” Dividend growth ETFs tend to be safer because they're comprised of high-quality names with comparatively lackluster current yields — often less than 3%. The upside: Those yields tend to be secure and reliable, and their growth rate increases over time. So if you value stable, consistent income above all else, dividend growth ETFs might be for you. High dividend yield ETFs are polar opposites. They focus on delivering eye-popping dividend yields of 9% to 10% or higher. But the price of those yields is greater risk: High dividend yields often are the cost of doing business for baskets of stocks that promise splashy current returns, regardless of their payout history. So if it matters most that your dividend ETF show you the money now, high dividend yield ETFs might be up your alley. Here are four dividend ETFs for conservative income investors and four for investors looking to score the heftiest current yields:



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