Top 11 Dividend ETFs to Buy Right Now

Transcription

1 Doug Fabian s SPECIAL REPORT For Successful ETF Investing Subscribers and ETFU.com Members Only The Top 11 Dividend ETFs to Buy Right Now Doug Fabian Editor, Successful ETF Investing

2 IMPORTANT NOTE: This special report is for information and educational purposes only, based on data as of September Do not buy or sell any investments until your seek the advice of your financial advisor. The Top 11 Dividend ETFs to Buy Right Now Copyright 2015, by Doug Fabian. All rights reserved. No quotes or copying permitted without written consent. Published by: Eagle Products, LLC 300 New Jersey Ave. 5 th Floor, NW Washington, DC / CustomerService@Fabian.com Website: 2

3 Doug Fabian s Top 11 Dividend ETFs To Buy Right Now Introduction Dear Investor, The following report contains 11 of my best recommendations for dividend-paying exchange-traded funds (ETFs). I created this report as a way for you to blow the lid off of Wall Street s Cash Cow Con and get revenge on the unscrupulous brokers who have kept these investments from you. I m confident that after reading this report you ll agree with me: dividend ETFs offer independent investors like you and me outstanding capital gains AND up to five times the yields of traditional income plays. But do you know why your broker hasn t mentioned these investments to you? It s because he doesn t earn nearly as much in fees from putting you into them. That s just not right. And here s how we stop that injustice. With that, I leave you to enjoy The Top 11 Dividend ETFs to Buy Right Now. Yours for bigger dividend yields, Doug Fabian Editor, Successful ETF Investing 3

4 Top Dividend ETF #1: ishares Mortgage Real Estate Capped (REM) This non-diversified fund tracks the investment results of an index which is composed of U.S. real estate investment trusts (REITs) that hold U.S. residential and commercial mortgages. The performance of REM is therefore based on the performance of the residential and commercial mortgage real estate, mortgage finance and savings associations sectors of the U.S. equity market. REM lost 9.65% in the first half of However, the fund currently features the highest yield of the 11 investments in this report, offering a whopping 14.44% that more than makes up for a performance stumble. This ETF has all of its holdings in the real estate sector. REM s top 10 holdings comprise 68.13% of its total assets. The top three of these companies are: Annaly Capital Management Inc. (NLY), 16.14%; American Capital Agency Corp (AGNC), 11.41%; and Starwood Property Trust, Inc. (STWD), 8.40%. 4

5 Top Dividend ETF #2: Global X SuperDividend (SDIV) This fund seeks to track the results of the Solactive Global SuperDividend Index, which is made up of a selection of high-dividend-paying global companies. SDIV rises when this index performs well and pays dividends itself through its investments in the indexed firms. And SDIV has weathered the turbulent market passably, down 3.99% in the first half of Beyond possible increases in share price, SDIV offers income-oriented investors a 6.94% dividend yield. This fund s largest sector weighting is real estate at 36.27%. Other large portions include financial services, 20.61%, and utilities, 10.11%. The fund s top 10 holdings comprise 14.10% of its total portfolio. The three highest of these holdings are: Evergrande Real Estate Group (EGRNF), 1.88%; Amlin plc, 1.55%; and Elisa Corp. (ELMUF), 1.49%. 5

6 Top Dividend ETF #3: PowerShares Global Listed Private Equities (PSP) This fund follows the Red Rocks Global Listed Private Equity Index, which is composed of securities, American depositary receipts and global depositary receipts of anywhere between 40 and 75 private equity companies, including business development companies (BDCs) and master limited partnerships (MLPs), among others. In short, PSP s success depends on the success of private equity companies, BDCs and MLPs. PSP gained 5.55% in the first six months of the year. This fund also offers its solid 8.99% dividend yield to catch the interest of investors. Most of PSP s holdings, 71.85%, come from the financial services sector, though it does have small allocations to the basic materials, industrials, technology, consumer defensive and healthcare sectors. Its top 10 holdings make up 43.13% of its assets and include investments not traded on U.S. exchanges. 6

7 Top Dividend ETF #4: SPDR S&P International Dividend (DWX) This exchange-traded fund (ETF) uses its assets to match the performance of the S&P International Dividend Opportunities index, which focuses on international dividend-yielding stocks that are diverse, stable and easy to trade. As the graph below shows, DWX has been volatile at times, and it lost 1.31% in the first half of the year. It also offers a nice 5.64% dividend yield for investors interested in additional income. DWX holds its assets in a wide variety of sectors, with utilities, 18.77%, communication services, 17.45%, and energy, 17.12%, currently leading the way in a fairly well distributed allocation spread. This ETF s top 10 holdings make up 27.03% of its assets, and the most heavily weighted stocks in its portfolio are Fortescue Metals Group Ltd (FSUGY), 3.52%; Berkeley Group Holdings plc (BKGFY), 3.06%; and National Grid plc (NGG), 2.88%. 7

8 Top Dividend ETF #5: Alerian Master Limited Partnership (AMLP) This fund seeks investment results that match the performance of the Alerian MLP Infrastructure Index. This tracks the performance of selected publicly traded U.S. Master Limited Partnerships (MLPs) that focus on energy infrastructure. Given the struggle facing the energy industry of late, it is no surprise that AMLP fell 11.18% in the first half of Fortunately for its investors, AMLP provides an 8.13% dividend yield. With luck, AMLP might recover in the remainder of the year. AMLP is fully invested in the energy sector, which holds 100% of its assets. More than half, 66.64%, of AMLP s assets reside in its top 10 holdings. The top three of these are: Enterprise Products Partners LP (EPD), 10.40%; Magellan Midstream Partners LP (MMP), 7.93%; and Energy Transfer Partners LP (ETP), 7.87%. 8

9 Top Dividend ETF #6: PowerShares CEF Income Composite (PCEF) This ETF tracks the investment results that correspond to the price and yield of the S-Network Composite Closed-End Fund IndexSM. The fund invests at least 90% of its total assets in securities of U.S.-listed closed-end funds that comprise the underlying index. As a fund of funds, PCEF invests in the common shares of funds included in the underlying index, rather than in individual securities. PCEF s year through the first half was nothing to write home about, coming out with a 3.25% loss. The fund currently offers an 8.91% dividend yield. The fund s holdings are weighted 60.28% in bond funds and 23.58% in stock funds. Its top 10 assets comprise 24.15% of the portfolio and don t include any individual holdings above 4%. The top three holdings include PIMCO Dynamic Credit Income Common Fund, 3.70%; Eaton Vance Tax-Managed Global Div. Equity Income Common Fund, 2.93%; and AllianceBernstein Income Fund, 2.65%. 9

10 Top Dividend ETF #7: PowerShares KBW High Dividend Yield Financial (KBWD) This non-diversified investment is another fund of funds that tracks the performance of the KBW Financial Sector Dividend Yield Index. It invests at least 90% of its assets in the publicly listed U.S. companies making up the index that provide financial services and products, including banking, insurance and diversified financial services. The underlying index also may include securities of BDCs and equity and mortgage REITs. KBWD had a bumpy ride in the last few months. Through the first half of 2015, it lost 4.49%, and it has dropped further since. Its current dividend yield is 9.02%. KBWD s holdings are comprised of income-producing funds, with no individual position consisting of more than 4.66% of total holdings as of this time. The top 10 holdings themselves make up 38.58% of KBWD s total assets under management. Its top three holdings are: Medley Capital Corporation (MCC), 4.66%; Anworth Mortgage Asset Corp. (ANH), 4.63%; and PennyMac Mortgage Investment Trust (PMT), 4.55%. 10

11 Top Dividend ETF #8: ALPS US Equity High Volatility Put Write (HVPW) This non-diversified fund is unique among the 11 within this report, as its returns aren t tied directly to the performance of stocks or bonds. Its results correspond to an index called the NYSE Arca U.S. Equity High Volatility Put Write Index, which measures the return of a hypothetical portfolio consisting of exchange-traded put options which have been sold on each of 20 stocks and a cash position. The difficult first half of 2015 was kinder to HVPW, as it lost only 0.44%. Meanwhile, HVPW still offers a robust 9.86% dividend yield. The fund s top 10 holdings are all put options on 20 stocks and several bond positions. There is no weighted apportionment to any specific sector or industry. Currently, some of these 20 stocks are GoPro Inc., OPKO Health Inc. and Newmont Mining Corp. 11

12 Top Dividend ETF #9: SPDR Wells Fargo Preferred (PSK) This non-diversified fund tracks the performance of the Wells Fargo Hybrid and Preferred Securities Aggregate Index. PSK invests at least 80% of its total assets in the securities comprising the index. The index is a modified market-capitalization-weighted index designed to measure the performance of nonconvertible preferred stock and securities that are functionally equivalent to preferred stock. As reflected in the chart below, PSK rallied significantly at the start of the new year and cooled off a bit to wind up losing 0.89% in the first half. This fund currently pays a 5.55% dividend. This ETF s holdings are predominately in the financial services sector, which makes up 85.93% of total assets held. No position currently is larger than 2.47% of total assets. PSK s top three holdings are PNC Financial Services Group preferred stock, 2.47%; HSBC Holdings preferred stock, 2.03%; and Goldman Sachs Group preferred stock, 2.01%. 12

13 Top Dividend ETF #10: Global X Superincome Preferred (SPFF) This non-diversified fund tracks the performance of the S&P Enhanced Yield North American Preferred Stock Index. It invests at least 80% of total assets in the securities of the underlying index, American Depository Receipts (ADRs) and global depositary receipts (GDRs). The underlying index tracks the performance of the highest-yielding preferred securities in the United States and Canada, as determined by Standard & Poor s. The chart below shows that SPFF went on a nice run early in 2015 before running into summer doldrums, ending in a loss of 2.81% for the first half of the year. It currently offers a 7.02% dividend yield. This ETF s holdings are 100% in the financial services sector. Its top 10 holdings reflect 36.57% of total assets, with no individual position accounting for more than 5.54%. SPFF s top three holdings are Wells Fargo & Co. Preferred, 5.54%; Gmac Capital Preferred, 4.05%; and Southwestern Energy Preferred, 3.82%. 13

14 Top Dividend ETF #11: IQ US Real Estate Small Cap (ROOF) This non-diversified fund tracks the investment results of the IQ U.S. Real Estate Small Cap Index. The fund employs a passive management style to track the performance of the underlying index, which was developed by Financial Development Holdco LLC, the parent company of Index IQ Advisors LLC, the fund s investment advisor. The underlying index is a rules-based, modified-capitalization-weighted, float-adjusted index intended to let investors track the overall performance of the small-capitalization sector. As the chart below reflects, ROOF has been on a downswing. ROOF finished the first six months of 2015 with a loss of 8.21%. The fund currently pays a 5.63% dividend yield. This ETF s holdings are 100% in the real estate sector and comprised of 99.4% stocks. The fund s top 10 plays constitute 29.67% of total assets, with no individual play accounting for more than 4.18%. The top three investments are New Residential Investment Corp. (NRZ), 4.18%; Hudson Pacific Properties, Inc. (HPP), 3.14%; and Medical Properties Trust (MPW), 3.13%. 14

15 Doug Fabian Doug Fabian is the editor of the free weekly e-letter, Weekly ETF Report, plus his paid financial newsletter Successful ETF Investing. Both are published by Eagle Financial Publications. He also has a new website, ETF University, or ETFU.com, designed to educate investors about the benefits of exchange-traded funds. Doug has helped his readers successfully navigate bull and bear markets for more than 30 years. His flagship advisory service, Successful ETF Investing, has produced double-digit percentage annualized returns since Doug often appears on CNBC, CNN and Fox News, and he has been featured in The Wall Street Journal, USA Today, The New York Times, Fortune, Smart Money and Barron s. Doug became a member of the SmartMoney 30 in 1999 a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known trend follower among the $56 billion (and growing) group of financial advisers. In 2001, Doug wrote Maverick Investing, published by McGraw-Hill. Doug has become known for his expert knowledge and timely use of innovative tools like exchange-traded funds, bear funds and enhanced index funds to profit in any market climate. 15

16 Eagle Products, LLC 300 New Jersey Ave. NW 5 th Floor Washington, DC / DIVETF