The 5 best equity ETFs that pay monthly dividends
Originally posted on : predictablesnowball.com
For those investors focused on dividend growth investing — companies that pay monthly dividends have been highly attractive for some time now. Monthly dividends are attractive for two primary reasons. First, they provide steady passive income you can count on month after month and that can really smooth out your income stream in general. Second, those monthly dividends will compound over time faster than quarterly dividends and that will pay off in the long run as well.The most popular, and potentially best known company in this category is Realty Income Corp (O). After all, their slogan is,”The monthly dividend company” which pretty much says it all.
Companies that pay monthly dividends are often classified as Real Estate Investment Trusts (REITs) or a Business Development Company (BDC)and have some potential drawbacks which include their tax liability if you are not utilizing a tax advantaged account. Also, they can sometimes be difficult to perform a strong valuation on since many have different types of fundamentals than traditional companies. If you are not looking at these types of investments consistently than they can add a lot of complexity to your investment approach.
If you find yourself in a situation where you want predictable monthly passive income, but are not ready to wade into the REIT and BDC waters yet — ETFs can be a great option for you. ETFs generally will collect dividends from all the companies within the fund and distribute those dividends quarterly. However, there are some funds that distribute their dividends monthly and these types of funds can be great options for those looking for passive income.
Below are the 5 best equity ETFs that distribute dividends monthly:
1.SPDR® Dow Jones Industrial Average ETF
- Ticker: DIA
- Yield: 2.48%
- Expense Ratio: .17%
- AUM: 12.61 bil
The SPDR Dow Jones is a low-cost index fund ETF that corresponds
to the price and yield performance of the Dow Jones Industrial Average, according to the fund’s prospectus. All SPDR funds were created and managed by State Street Global Advisors (SSGA). The fund was started in 1998 and has produced almost a 7% return since inception. 3M Company (MMM), International Business Machines (IBM) and Goldman Sachs Group Inc (GS) are the three biggest holdings in the fund.
2.WisdomTree Total Dividend ETF
- Ticker: DTD
- Yield: 2.8%
- Expense Ratio: .28%
- AUM: 523.58 mil
The WisdomTree Total Dividend fund tracks the The WisdomTree Dividend Index which is a fundamentally-weighted index that defines the dividend-paying portion of the U.S. stock market. The Index measures the performance of US companies, listed on the NYSE, AMEX or NASDAQ Global Market, that pay regular cash dividends and that meet other liquidity and capitalization requirements established by WisdomTree, according to the fund’s prospectus. The fund was started in 2006 and has a 7.32% return since inception. AT&T Inc (T), Exxon Mobil Corp (XOM) and Microsoft Corp (MSFT) are the three biggest holdings in the fund.
3.PowerShares S&P 500 Low Volatility ETF
- Ticker: SPLV
- Yield: 2.08%
- Expense Ratio: .25%
- AUM: 7.93 bil
The PowerShares S&P 500 Low Volatility by Inveso tracks the S&P 500® Low Volatility Index (Index). The Index is compiled, maintained and calculated by Standard & Poor’s and consists of the 100 stocks from the S&P 500® Index with the lowest realized volatility over the past 12 months. The fund was started in 2011 and has a 14.03% return since inception. AT&T Inc (T), Waste Management (WM) and PepsiCo Inc (PEP) are the three biggest holdings for the fund.
4.PowerShares S&P 500® High Div Low Vol ETF
- Ticker: SPHD
- Yield: 3.22%
- Expense Ratio: .30%
- AUM: 2.53 bil
The PowerShares S&P 500® High Div Low Vol fund by Inveso seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P 500 Low Volatility High Dividend Index. The fund was started in 2012 and has a 16.68% return since inception. HCP Inc (HCP), Garmin Ltd (GRMN) and CenturyLink Inc (CTL) are the three biggest holdings for the fund.
- Ticker: PFF
- Yield: 5.74%
- Expense Ratio: .47%
- AUM: 17.24 bil
The iShares U.S. Preferred Stock ETF seeks to track the investment results of an index composed of U.S. preferred stocks., according to the fund’s prospectus. The fund was started in 2007 and has produced a 4.55% return since inception. Allergan PLC (AGN), GMAC Capital Trust I (ALLY) and Barclays Bank PLC (BACR) are the three biggest holdings in the fund.
Summary:
All of these funds are great options for investors looking for monthly dividends. Each fund provides an adequate yield, broad diversification and minimal costs (expense ratio). These funds can even be a great starting point for dividend growth investors because their diversification and tracking to popular indexes greatly minimizes the inherent risk.
Make sure you check these funds out and let me know if you think there are others that should be included on the list.
Originally posted on : predictablesnowball.com
