3 High Paying Dividend ETFs – DVY, DEM, MLPY
Over the last six years, the low interest rate environment has been especially hard on retired investors.
The reason’s simple…
As people enter retirement, they typically shift their investment portfolio from one focused on growth into one that’s focused on generating income.
The problem is, the low interest payments on safe investments like US Treasuries don’t generate enough income for the average investor to live off of.
As a result, many people have turned to dividend paying stocks and ETFs. These investments generate more income than Treasuries and bonds. And most importantly, they generate enough income so that investors can live off of the income without dipping into their nest egg.
Not surprisingly, high-dividend yield investments have been one of the most popular investment strategies over the last few years. And ETF providers have responded by creating new ETFs to meet the investor demand. There are now at least 75 US listed ETFs that focus on dividends.
Here are three dividend ETFs worthy of consideration for your income producing portfolio…
iShares Select Dividend ETF (DVY)
DVY is a popular ETF for investors seeking high-dividend payments.
It focuses on US large-cap stocks. The stocks are selected based on dividend yield after being screened for dividend per share growth rate, dividend payout percentage rate, and average daily dollar trading volume.
DVY has amassed more than $14 billion in assets under management. It has an annual dividend rate of $2.54 and a dividend yield of 3.34%.
Some of the top holdings include Lockheed Martin (LMT), Entergy (ETR), Chevron (CVX), and other large companies that pay dependable and growing dividends.
WisdomTree Emerging Markets Equity Income Fund (DEM)
US stocks aren’t the only way to generate dividend income. Select stocks in emerging markets are paying solid dividends as well.
DEM selects and weights emerging market stocks based on dividend yield.
This strategy gives DEM exposure to more established companies that mitigate the risk typically associated with investing in emerging markets. What’s more, the higher growth rates in emerging markets can generate faster dividend growth rates than US stocks.
Right now DEM has an annual dividend payout of $1.66 and a dividend yield of 3.16%. These compelling reasons have allowed DEM to collect nearly $4 billion in assets under management.
Having an ETF like DEM in your portfolio is a good way to diversify your income portfolio and gives you the potential for larger dividend payments in the future.
Morgan Stanley Cushing MLP High Income Index ETN (MLPY)
One the fastest growing alternative investments to generate income is Master Limited Partnerships or MLPs.
These investment vehicles are required to generate 90% of their cash flows from real estate, natural resources, and commodities. For many MLPs, these include all manner of activities related to the production, processing or transportation of oil, natural gas, and coal.
MLPs are also required to pay investors quarterly distributions. So they make an ideal investment for people looking to generate income from their investments. Since the first ETF containing MLPs launched in 2010, exchange traded products with MLPs have quickly gained acceptance.
MLPY tracks the performance of 30 publicly traded energy and shipping master limited partnerships. The most important factor is the current yield. It currently has an annual dividend payout rate of $1.36 and an annual dividend yield of 6.95%.
In my opinion, income investors are missing out on a great source of income if they don’t have exposure to the high dividend payouts from MLPs. And an ETN like MLPY is an easy way to access these investments.
Here’s the upshot…
US large cap stocks that have a history of paying and growing their dividend is a great place for income investors to start. But don’t overlook emerging markets and alternative investments like MLPs as a good source of income.
Good Investing,
Corey Williams
Category: Dividend ETFs, ETFs
