Dividend investing has proven to be a staple strategy for investors of all walks; the appeal of a current income stream is only magnified in the current ultra-low rate environment, making dividend-paying securities all the more attractive. As such, ETFs have become a popular vehicle of choice for investors looking to beef up their portfolio’s current return. While many ETFs make payouts annually or quarterly, there are several that pay distributions on a monthly basis. For those looking to collect a distribution twelve times a year, below we highlight 3 high-yielding monthly dividend-paying stock ETFs [see also 12 High-Yielding Monthly Distribution Bond ETFs].
Each of the ETFs highlighted below has an annual yield of 3% or more at present, and makes payouts to investors on a monthly basis. Please note that this list does not include offerings from the Preferred Stock/Convertible Bonds ETFdb Category. For those who value a steady stream of cash flow, these stock ETFs may offer a creative solution to the low yield challenge [see also High Yield ETFdb Portfolio]:
|Ticker||Expense Ratio||30-Day SEC Yield*|
|*As of 5/23/2012 listed on issuers website|
PowerShares KBW High Dividend Yield Financial Portfolio (KBWD)
This ETF tracks the KBW Financial Sector Dividend Yield Index, which consists of roughly 35 domestic publicly listed financial companies that are engaged in the business of banking, insurance, and diversified financial services. KBWD has accumulated close to $87 million in assets under management since launching in December of 2010, making it a popular offering in the Financial Equities ETFdb Category.
The majority of the underlying holdings are either mid or small cap size stocks, giving this ETF a unique risk/return profile that may appeal to those with a stomach for volatility. From a sector breakdown perspective, mortgage REITs account for nearly half of the portfolio’s total assets; regional banks and asset management & custody banks also receive major allocations.
Global X SuperDividend ETF (SDIV)
This Global X ETF is linked to the Solactive Global SuperDividend Index, which is an equal weighted benchmark of 100 companies that rank among the highest yielding securities from around the globe. SDIV has attracted $66 million in assets under management since launching in mid-2011, showcasing investors’ demand for dividend-paying ETFs [see also Ultimate Guide To Dividend ETF Investing].
SDIV’s underlying portfolio is well-balanced; this ETF is linked to an equal weighted index that allocates about 1% to each of the 100 or so components. Exposure is also equally spread out among large, mid, and small cap size equities, although smaller firms receive a slightly greater weighting overall. Top allocations by sector include telecommunications and REITs; exposure is also spread out to financials, consumer discretionary, and utility stocks.
PowerShares High Yield Dividend Achievers (PEY)
PEY looks to track the Dividend Achiever 50 Index, which is comprised of 50 stocks that are deemed to exhibit relatively high yields and consistent growth in dividends. This ETF focuses solely on domestic equities, with mid and small cap size stocks accounting for the bulk of the portfolio, although giant and large equities also receive adequate allocations. PEY has accumulated nearly $265 million in assets under management since launching in December of 2004, making this the oldest monthly dividend-paying fund on the list.
From a sector breakdown perspective, commercial banks receive the largest allocation; exposure is also rounded out to gas utilities, electric utilities, tobacco, and insurance companies, giving this ETF quite the diversified basket of holdings [see Comparing Four Dividend ETFs].
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Disclosure: No positions at time of writing.