Dividend ETF for income investing

Dividend ETF investing is one possibility to have nice gains from the stock market even when such market is in trading range and does not offer any significant return of investment. Last decade (2000 – 2010) the S&P500 spent in a very big range and buy-and-hold investors did not see any significant return in this time period.

It is wise to use dividend exchange traded funds from time to time and place such exchange trade funds into a portfolio. When I do not expect that the market will be in an important bull trend, then it is better to put free cash into some pick from the dividend etf list ad earn some yield.

There are companies with plenty of cash, contrary to governments in the developed world, and often provide part of this free cash back to its shareholders.

Ishares dividend funds

I found two dividend funds that I would consider for my personal portfolio from time to time. Both are iShares ETFs. HDV – The iShares High Dividend Equity Fund seeks investment results that correspond generally to the Morningstar Dividend Yield Focus Index.

Biggest holdings in this dividend funds producing dividends are to date (Jul 2011):

DVY – The iShares Dow Jones Select Dividend Index Fund seeks investment results that correspond generally to the Dow Jones U.S. Select Dividend Index.

The biggest holdings in this fund producing dividends are to date (Jul 2011):

Best dividend paying funds

In the past I did the exercise to sort out funds by dividends, but I think one may not be aware that lots of funds pay special dividends, so it is no remedy to look at past 12 months only. One should search primarily among debt asset class funds. Here today (Jul 2011), I would recommend diversifying into Asian currencies and Asian bonds. Good options are ICN, ELD.

High-yield debt funds such as HYG have been popular over the past 24 months but that trade is dead now as spreads have compressed and I would go neutral or underweight. If one has to go high-yielders, I would pick bulletshares, funds with a pre-determined day when all funds will be distributed. In these funds, bonds are basically held to maturity and one can get a decent roll-down by playing the steep yield curve. Look for Guggenheim ETF with ticker  BSJF.