Thursday, November 13, 2008

Dividend ETF’s for busy investors

In my blog, Dividend Growth Investor, I am always trying to find out the best dividend stocks which would provide me with a dividend income stream that would increase above the levels of inflation for many decades to come. If I didn’t have any time to go through all the hassle of picking individual dividend stocks however, I would have turned to dividend ETF’s.

I have stated several reasons why I don’t like investing in dividend etf’s in a previous article. If you want to own a portfolio of stocks which is ready to be purchased in a single ETF trade, and paying an annual fee is not an issue for you, then this article could be beneficial for you.

Most of my readers are aware that I am fascinated with the Dividend Aristocrats index, which is an equally weighted index which includes a select group of dividend stocks which have increased their dividends for over twenty five consecutive years. The bad news is that there isn’t an ETF that covers this index at the time. There is however an dividend ETF which covers the High-Yield Dividend Aristocrats index, which resembles the dividend aristocrats index closely in terms of performance and components.

The S&P High Yield Dividend Aristocrats ETF has an annual fee of 0.35%. The ETF currently yields 4.40%.

There are several other notable dividend ETF’s out there as well, which focus on rising dividend income:


PowerShares HighYield Dividend Achievers ETF (PEY) tracks the Mergent’s Highest Yielding Dividend Achievers Index. The total annual fee is 0.60%, while the index is currently yielding 5.69%.

The PowerShares Dividend Achievers ETF (PFM) tracks The Broad Dividend Achievers Index, which consists of companies that have increased their annual dividend for ten or more consecutive fiscal years. The annual fee is 0.60%, and the current yield is 2.72%.

The PowerShares International Dividend Achievers ETF (PID) tries to replicate The International Dividend Achievers Index which includes companies that have increased their annual dividend for five or more consecutive fiscal years. The annual management fee is 0.58% and the current yield is 4.91%.

iShares Dow Jones Select Dividend Index ETF(DVY) is the first dividend focused ETF, launched in 2003. This fund has a 0.40% annual expense ratio and currently yields 4.65%.

BlackRock Dividend Achievers Trust (BDV) has the highest management fee amongst all dividend ETF’s at 0.83% annually. The dividend yield is 9.90%. This fund is a prime example of the fact that higher management fees do not lead to superior investment performance after all. I should also add that this fund is more actively managed as the advisor tries to select a varying number of dividend achievers which spot the highest yields.

PowerShares High Growth Rate Dividend Achiever (PHJ) consists of the 100 United States stocks with the fastest growing dividends for the past 10 years. This ETF yields 2.70% and has an annual management fee of

Full Disclosure: Long S&P 500

Relevant Articles:

- MarketClub BONUS, 2 FREE MONTHS!
- International Dividend Achievers for diversification.
- Why do I like Dividend Aristocrats?
- Long term returns of S&P high-yield aristocrats
- Why do I like Dividend Achievers

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