Dividend -seeking ETFs

Today we present a list of eight Exchange Traded Funds (ETFs) which invest in good companies that consistently pay out dividend:

In November 2003 Barclays Global Investors introduced the first dividend ETF, iShares Dow Jones Select Dividend (DVY). That fund carries an expense ratio of 0.4%. The timing of its introduction was perfect and it gained a lot taking advantage of the 2003 federal legislation that slashed the income tax rate to 15% on dividends paid out by corporations. The fund's tracking index targets the top 100 domestic stocks by dividend yield, screened by dividend-growth rates, payout ratio and trading volume.

PowerShares Capital Management offers as many as 4 ETFs that invest in income-producing stocks: PowerShares High Yield Equity Dividend Achievers (PEY) , PowerShares Dividend Achievers (PFM) and PowerShares High Growth Rate Dividend Achievers (PHJ) hold U.S. companies, while PowerShares International Dividend Achievers Portfolio (PID) tracks foreign stocks.

State Street Global Advisors manages the SPDR Dividend ETF (SDY), which follows a Standard & Poor's index measuring the performance of the 50 highest-yielding domestic stocks that have consistently raised dividends for at least 25 years.

First Trust Morningstar Dividend Leaders (FDL) is based on a benchmark of about 100 high-yielding companies with a history of consistent payouts.

Vanguard Dividend Appreciation Index Vipers (VIG) is the first dividend-seeking ETF from Vanguard Group and tracks the Mergent Dividend Achievers Select Index. It began trading on the American Stock Exchange in late April and carries a low expense ratio of 0.28%. "Vipers" (short for Vanguard Index Participation Equity Receipts) are ETFs designed as separate share classes of regular Vanguard index funds - in this case the Vanguard Dividend Appreciation Index Fund (VDAIX).

In one of our past postings we discussed relative merits and demerits of iShare's DVY and Powershare's PEY.