Exchange traded funds (ETFs) outperformed the fund universe in 2011 and will likely continue the trend in 2012. Investors are looking for safety and yield, and dividend ETFs offer a low-cost, transparent way to invest in a basket of companies and mitigate single-stock risks. The following screen looked at performance, dividend yield, expense ratio and analyst recommendations. All of these ETFs are rated a buy or hold by Ned Davis Research. The list has some interesting ETFs such as:
POWERSHARES S&P 500 BUYWRITE PORTFOLIO (PBP) – seeks investment results that generally correspond (before fees and expenses) to the price and yield of the CBOE S&P 500 BuyWrite Index. The fund normally invests at least 80% of total assets in common stocks of the 500 companies included in the S&P 500® Index and writes (sells) call options thereon. PBP was recently upgraded by Ned Davis Research on January 6 2012. PBP has a high yield of 10.16% which must be in the top range of ETFs.
POWERSHARES CEF INCOME COMPOSITE PORTFOLIO (PCEF) – seeks income by being a “fund of funds” by investing in 124 different closed-end funds in various types and strategies. This is a nice offering for investors wanting to diversify across a significant amount of CEFs without the single-CEF risk. PCEF price performance has improved over the last 13 weeks but this is an ETF for dividends as it provides a dividend yield of 8.27%. Top CEF holdings include: EXG, ACG, ETY, EVV, FAX, JQC, ETW, BBN, NFJ and ETJ.
SPDR BARCLAYS HIGH YIELD BOND ETF (JNK) and ISHARES IBOXX $ HIGH YIELD CORPORATE BOND (HYG) provide fixed income ETFs with high yields. For exposure to preferred stock dividends look at these ETFs: POWERSHARES FINANCIAL PREFERRED PORTFOLIO (PGF); SPDR WELLS FARGO PREFERRED STOCK ETF (PSK; ISHARES S&P US PREFERRED STOCK INDEX (PFF); POWERSHARES PREFERRED PORTFOLIO (PGX).
Here is the list of ETFs passing the screen for high yield ETFs: