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6 Dividend ETFs of 2016 with Over 3% Yield & 20% Returns

Sanghamitra Saha

Dividend investing is among the investing themes that are on a tear this year amid piles of uncertainty. Wall Street saw the worst start ever to a year in 2016 on the Chinese market crash and recovered modestly thereafter.

However, risk-off sentiments still prevailed with constant global growth issues especially deflationary fears in Japan and the Euro zone, ambiguity over the Fed rate hike momentum, Brexit in June, oil price volatility and uncertainty over the next U.S. president.

As a result, high risk securities were on the edge in the initial phase of this year, except for some occasional relief rallies. For obvious reasons, the drive to safety has given a boost to demand for U.S. treasuries this year, and took the benchmark 10-year U.S. Treasury bond yields to record lows in July (read: Global Treasury Yields Dive: Play These Sector ETFs).

No wonder, such a low dividend yield would spur investors to rush to dividend destinations. Also, the wave of easy money polices across the developed world, and negative interest rates in a number of economies including the Euro zone and Japan brightened the appeal for dividend investing.

Agreed, things turned around from November with Trump’s election win and the consequent initiation of an astounding stock market rally. Hopes of fiscal reflation in the Trump presidency pushed up bond yields rapidly (read: Top and Flop ETFs of November).

Putting some more energy into the rally, oil prices recovered to an over $50-level from $30 a barrel in February thanks to an OPEC output cut deal. The Fed also executed the sole rate hike of 2016 in mid-December, taking the benchmark 10-year U.S. Treasury yield to 2.55% on December 21 and marring the flair for dividend investing on average (read: Is the Dividend ETF Bull Run Over?).

But still this segment has been in the winners club from a year-to-date look with products like ProShares Russell 2000 Dividend Growers SMDV gaining about 31% so far this year (as of December 21, 2016) against 10.7% returns offered by SPDR S&P 500 ETF SPY.

Inside Dividend ETF Winners with at least 3% Yield & 20% Returns

We thus highlight a few ETFs with over 3% yield and at least 20% year-to-date returns. Take a look at the list. These funds can make you rich even in 2017 if Trump’s administration doesn’t match the expectations of the market, OPEC deal fails to stand up or Fed’s policy tightening goes back to the sluggish mode all over again.

PowerShares Russell 2000 Pure Value ETF PXSV – Up 33.9%

The fund looks to track stocks with strong value features that are within the Russell 2000 Index. It charges 39 bps in fees and yields 3.16% annually (as of December 21, 2016). Financials (38.6%) and Energy (17.8%) are the top two sectors of the fund. No stock accounts for more than 1.60% of the fund.

PowerShares High Yield Equity Dividend Achievers Portfolio PEY – Up 27.9%

This ETF tracks the NASDAQ US Dividend Achievers 50 Index, focusing on 50 stocks for exposure. Securities are selected for this fund based on their dividend yield, and their consistency in hiking dividends. The fund yields about 3.12% annually (read: 4 High Dividend ETFs Under $20).

Oppenheimer Ultra Dividend Revenue ETF (RDIV) – Up 26.1%

The product is made up of 60 securities with the highest average quarterly dividend yield over the past 12 months, which are then reweighted according to the revenues of the company. The fund is heavy on utilities with about 22.2% focus while consumer cyclical (18.8%), communications (16.7%) and consumer non-cyclical (10.8%) round out the top four spots. The Zacks #2 ETF yields 3.17% annually (as of December 21, 2016).

AdvisorShares Athena High Dividend ETF DIVI – Up 21.5%

This actively managed ETF is heavy on North America (74%) followed by Latin America (10%) and Europe (6%). No stock accounts for more than 3.42% of the fund. It yields about 3.27% annually and charges 99 bps in fees.

SPDR S&P 500 High Dividend ETF (SPYD) – Up 20.6%

This fund charges 12 bps in fees and looks to track the S&P 500 High Dividend Index. The fund yields about 5.24% annually and does not put more than 1.78% in any stock. It yields about 5.24% annually.

PowerShares KBW Premium Yield Equity REIT Portfolio KBWY – Up 20.6%

The underlying index of the fund follows a dividend yield weighted methodology that looks to track the performance of about 24 to 40 small- and mid-cap equity REITs in the U.S. It yields about 6.71% and charges 35 bps in fees (read: Top Sector ETFs of Summer).