Become A Dividend Focused Investor In 2010 With These ETFs

dividends“2009 turned out to be a great year overall for most stocks; nevertheless, dividend-focused investors weren’t so lucky. Through the year, dividend payouts from the large cap S&P 500 (NYSE:SPY) fell about $52.6 billion, or 21.4%, from 2008. According to Standard & Poors, this is the largest drop in payments since 1993. Equity income investors have also had to deal with underperformance. As a category, dividend yielding stocks lagged the broad market and other sectors such as technology and emerging markets, as investors tilted their portfolios toward risk,” Aaron Levitt Reports From Investopedia.

“There may be signs of a dividend rebound in 2010. The broad-based iShares Dow Jones Select Dividend ETF (NYSE:DVY), which follows a basket of stocks with the highest-paying dividends such as Kimberly-Clark (NYSE:KMB), has recently begun to outperform the broad indexes. Through December, (DVY) has nearly doubled the return of the S&P 500. Many analyst believe that the threat of widespread dividend cuts are behind us, as there have been zero cuts in payouts in December. Several of the highest yielding sectors, for example financial stocks, have already cut their payments down to nearly nothing. Widespread belief that the global economy is getting better is also spurring growth in dividend investing. More revenue from corporations with lead to better dividend coverage ratios and payouts for shareholders,” Levitt Reports.

“The S&P 500 is currently yielding 2.16%, which is low by the historical standard of 3.8%, but remains attractive when compared to the paltry interest rates that Treasuries and money-market funds are paying. Combine this with the potential for stock price appreciation and you have a recipe for success. Adding a dividend component to a portfolio is easy. Investors can opt for the single ticker approach, either through the iShares Dividend fund or its SPDR-run sister, the S&P Dividend (NYSE:SDY). Both funds yield around 3.5%; however, investors can find higher yields by choosing some of the funds’ constituent stocks,” Levitt Reports.

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We have listed some details on the iShares Dow Jones Select Dividend ETF (NYSE:DVY) & the SPDR S&P Dividend ETF (NYSE:SDY) below:

The investment (DVY) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Select Dividend index. The fund generally invests at least 90% assets in securities of the underlying index and depositary receipts representing securities of the underlying index. It may invest the remainder of its assets in securities not included in its underlying index but which BGFA believes will help the fund track its underlying index, and in futures contracts, options on futures contracts, options and swaps as well as cash and cash equivalents.

TOP 10 HOLDINGS (DVY) ( 20.09% OF TOTAL ASSETS)  
 
Company Symbol % Assets
CENTURYTEL INC (CTL) 2.3
CHEVRON CORP (CVX) 1.59
EASTMAN CHEM CO (EMN) 2.3
EATON CP (ETN) 1.78
ENTERGY CP (ETR) 1.82
KIMBERLY CLARK CP (KMB) 1.85
LORILLARD, INC (LO) 3.08
P P G IND (PPG) 1.84
V F CP (VFC) 1.94
WATSCO INC (WSO) 1.59

The investment (SDY) seeks to replicate, before expenses, correspond generally to the price and yield of the S&P High Yield Dividend Aristocrats index. The fund uses a passive management strategy designed to track the price and yield performance of the Dividend index. It is nondiversified.

TOP 10 HOLDINGS (SDY) ( 31.13% OF TOTAL ASSETS)  
 
Company Symbol % Assets
BLACK HILLS CP (BKH) 2.84
CENTURYTEL INC (CTL) 3.46
Cincinnati Financial Corporatio (CINF) 3.21
CONS EDISON INC (ED) 3.09
LILLY ELI CO (LLY) 3.13
INTEGRYS ENERGY GRP (TEG) 3.14
LEGGETT PLATT INC (LEG) 3.07
PITNEY BOWES INC (PBI) 3.65
SUPERVALU INC (SVU) 2.67
VECTREN CORP (VVC) 2.87

Chart for iShares Dow Jones Select Dividend Index (DVY)

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