U.S. Markets close in 3 hrs 38 mins

Don't Sell, Buy 4 High Dividend ETFs Under $20 in May

Sanghamitra Saha

The key U.S. equity gauges are hovering around all-time highs and the ongoing earnings season is in good shape. Naturally, the broader market may score higher in the coming days. But in reality, U.S. stocks are accused of overvaluation and there are uncertainties in the materialization of Trump’s proposed policy reforms (read: Good Quality ETFs and Stocks for an Edgy Market).

Even if these reforms get enacted, the broader market seems to have already priced in these proposals in its last six-month rally. Plus, as the broader market steps into the fifth month of the year, the old adage – “sell in May and go away” – took the center stage. The proverb is rooted in the S&P 500’s rueful historical run for the May-to-October period. Some economic data also came in weak lately (read: ETF Winners & Losers of April 2017).

What Should Investors Look for Now?

In an overvalued market, hunting low-priced stocks and ETFs could be a great tactic. As investors poured more money to make the most of the rally, they may have run out of cash. They may want to take part in the stock market party in the coming days and must be on the lookout for some ETFs that are still trading below $20 but have reasons to outperform ahead.

Another wining investing strategy could be high dividend ETF. The wave of easy money polices across the globe, especially negative interest rates in a number of economies including the Euro zone and Japan, should brighten the appeal for dividend investing. Though the Fed is on a policy tightening mode, the yield on benchmark U.S. Treasury is still at a subdued level. As of May 1 2017, the yield on the benchmark 10-year Treasury note was 2.33%.

So, investors must be in search of dividend ETFs that offer benchmark-beating yields. After all, high-dividend ETFs provide investors avenues to make up for capital losses, if that happens at all. We thus have zeroed in on some global high dividend ETFs. We broadened our vision to the global level given that several international economies are looking up currently (read: IMF Ups Global Growth Forecast: 3 ETFs to Buy). 

We highlight four high yield dividend ETFs under $20 that investors can keep a watch on in the days to come (see: all the World ETFs here).

Guggenheim S&P Global Dividend Opportunities Index ETF LVL – $10.59 (as of May 1)

This ETF follows the S&P Global Dividend Opportunities Index which focuses on high yielding securities worldwide. As many as 109 securities are chosen from around the world for inclusion, with heavy exposure going toward the energy (28%), financials (15.9%) and utilities (13.4%) securities. American and Australian stocks account for about 45% of total assets. The fund yields about 4.72% annually.

First Trust STOXX European Select Dividend Index Fund FDD – $12.72 (as of May 1)

This ETF follows the STOXX Europe 600 Index which focuses on high yielding European securities. Heavy exposure goes toward the financials (29.4%) securities followed by industrials (13.79%), energy (12.50%), real estate (11.78%) and utilities (11.59%). stocks from the U.K. and France account for about half of total assets. The fund yields about 4.56% annually.

PowerShares International Dividend Achievers Portfolio PID – $15.07(as of May 1)

This international fund gives exposure to stocks with successive years of dividend growth. Canada (30.8%) and U.K. (30%) are top countries of the fund. Financials (22.2%) and Energy (21%) take the top two spots in the fund. It yields 3.76% annually.

MSCI SuperDividend EAFE ETF EFAS – $16.90 (as of May 1)

The underlying index of the fund targets about 50 of the highest dividend yielding equity securities from international developed markets. Britain (24.2%), Australia (15%) and France (11.8%) are top three countries of the fund. Financials (28.2%) is the top sector of the fund. The 30-Day SEC yield of EFAS is 4.77% (as of April 28, 2017).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
PWRSH-INTL DVD (PID): ETF Research Reports
 
GUGG-SP GLBL DV (LVL): ETF Research Reports
 
FT-STX EURO SEL (FDD): ETF Research Reports
 
GLBL-X MS SPRDV (EFAS): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report