3 Unbeatable Dividend ETF AllStars for Your Portfolio

Post on: 29 Март, 2015 No Comment

3 Unbeatable Dividend ETF AllStars for Your Portfolio

Despite some rocky trading as of late, major U.S. benchmarks are actually still having a pretty good year. In fact, SPY is trading higher by roughly 8% so far in 2014, a level that is on par with what the U.S. market usually does on average in a full calendar year.

Yet while this is a pretty good return so far for the year, there are several more specialized ETFs that have easily trounced this return level. While many of these are in higher risk sectors like biotechnology or recently-in-focus MLPs, several dividend ETFs have also stolen the show.

These big yielders have all beaten SPYs return so far in 2014 (all have added at least 12% YTD), while providing higher amounts of income as well. And the best part is, should the economy slide in the near term, their bigger payouts should help to cushion the blow a little bit, especially when compared to higher growth stocks and funds which have been the other leaders of the market lately (see 4 Excellent Dividend ETFs for Income and Stability ).

Below, we highlight three such dividend ETF all-stars for your portfolio. These not only have beaten the markets return YTD but pay out better yields than SPY too, making them interesting choices for investors looking for both outperformance potential and income in todays market:

First Trust NASDAQ Technology Dividend Index Fund (TDIV )

For a different type of dividend ETF, investors can look to TDIV which tracks the NASDAQ Technology Dividend Index. This has been a winning (and overlooked) dividend strategy for investors in 2014 as the fund has added 12.3% YTD while its 30-Day SEC yield comes in at 2.7%, though the index yield is 3.3%.

There are currently about 90 stocks in this fund with large caps taking the lions share due to the funds dividend value weighting methodology. Current top holdings include Intel, Microsoft, and Apple, while top sectors include semiconductors (23.7%), hardware (16.2%), and software (16.1%).

Fortunately for this fund, many large cap tech names, and especially in the semiconductor industry, have done quite well this year, making this a great technology ETF pick. Investors have started to embrace this approach too, as the fund has over $630 million in assets and average daily volume over 150,000 shares, despite its 50 basis point cost (see all the technology ETFs here ).

SPDR S&P Global Infrastructure ETF (GII )

Although not a true dividend ETF, GII tracks 75 of the largest publicly listed infrastructure companies, and many of these firms have rather large dividends. This has been a great approach this year though as the fund has added 13.7% YTD while paying out a very solid 4% yield in 30 Day SEC terms.

In terms of holdings, transportation infrastructure companies take the top spot at 38%, followed by oil and then utilities. American stocks do take the top country spot at about one-third of the total, followed by Canada (10.4%), Australia (7.8%), France (7.4%), and the UK (7.4%).

Global companies in more defensive sectors have been doing well this year, while many utilities here in the U.S. have bounced back with force, boosting GII as of late. However, investors should note that while GII is pretty cheap for a global fund at a cost of just 40 basis points a year, it is relatively unpopular from a trading perspective (10,000 shares a day on average) though over $140 million is invested in the ETF (also see ProShares Rolls Out New Global Infrastructure ETF ).

Global X SuperDividend U.S. ETF (DIV )

Forget all-stars, this dividend ETF has been a superstar and MVP for dividend investors in 2014. Not only has the fund added 16.1% since the start of January, but it pays out a robust 5.8% in 30 Day SEC terms as well.

This outperformance was achieved by taking on a little more risk, as the fund tracks an underlying index that holds the 50 highest dividend yielding equity securities in the U.S. equally weighted. While this gives heavy weights to utilities and energy, mortgage REITs (16.6%) also receive a large chunk of the assets, and MLPs are included in the energy segment too.

3 Unbeatable Dividend ETF AllStars for Your Portfolio

This could come back to bite DIV if interest rates take a sharp move higher, but it has been doing quite well for some time, as its one year performance comes in at 26.3%. This solid performance has allowed DIV to accumulate over $160 million in assets since its launch in March 2013, though volume is still relatively low for this fund at 51,000 shares a day on average while expenses are 45 basis points a year (read Are There Really High Dividend Low Risk ETFs? ).

Bottom Line

Even though the market has been rocky, many equities have performed quite well this year. Dividend ETFs have been no exception to this positive trend, and many have put up double digit returns so far in 2014.

In fact, the funds mentioned above have not only easily beaten the markets performance YTD, but offer yields that easily crush SPYs as well. These products thus might be the perfect mix between returns and income for investors who are looking for a dividend ETF all-star as the summer winds down.

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