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Investing In A High Dividend ETF

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Why Invest In A High Dividend ETF

High Dividend ETFWith the broad stock market averages making little or no discernible gains over the past decade, investors looking for long term stock market gains would be wise to consider an investment in a high dividend Exchange Traded Fund (ETF), high dividend ETF.  Investing in a high dividend ETF not only provides investment returns in the form of dividends, it also is a safer way to invest in the stock market than to try to pick winners and losers amongst individual stocks.

A high dividend ETF will pay a dividend during bull and bear markets.  Investors that do not need the dividend income that a high dividend ETF generates can make additional money in the stock market over the long run by reinvesting dividends from a high dividend ETF back into a high dividend ETF to increase the dividend payout in the future and potentially reap the rewards of a long term appreciation in the price of a high dividend ETF.  Regular reinvestment of dividends from a high dividend ETF is a good way to grow a nest egg in the stock market without exposing one’s investment portfolio to the risks associated with investment in individual companies, since a high dividend ETF spreads the risk of investing in stocks amongst numerous dividend paying stocks.

High Dividend ETF Investment Ideas

The following are some high dividend ETF investment ideas.  This is by no means a complete list of high dividend ETF investment ideas, but is provided to provide examples of high dividend ETFs that are available for investors seeking income or long term growth from dividend paying stocks.  The interest rates and dividend yields outlined below are subject to change over time.

  • Junk Bond Funds – Barclays Capital High Yield Bond Fund (Symbol:  JNK) offers a 7.40% annual interest rate.
  • Municipal Bonds Funds – Municipal Bond ETFs invest in bonds that are sold by municipal, county, and state governments throughout the United States.  Municipal Bond ETFs pay up to 7% in annual tax free interest.
  • Preferred Stock Funds – iShares S&P US Preferred Stock (Symbol:  PFF) offers an annual dividend yield of 6.02% and PowerShares Financial Preferred (Symbol:  PGF) offers an annual dividend yield of 6.93%.
  • Market Vectors Uranium & Nuclear Energy ETF (NLR) – NLR is an ETF that invests in nuclear energy related companies included in the DAX global Nuclear Energy index.  The ETF offers an annual dividend yield of 12.18%.
  • PowerShares S&P 500 Buy-Write Portfolio (PBP) – PBP is an ETF that uses the options market to generate income for the fund by selling call options using a Buy-Write strategy.  The fund offers an annual dividend yield of 10.57%.
  • iShares FTSE NAREIT Mortgage Plus Capped Index Fund (REM) – REM is an ETF that invests in stocks included in the FTSE NAREIT All Mortgage Capped Index. The fund pays an annual dividend yield of 11.49%.
  • PowerShares KBW High Dividend Yield Financial Portfolio (KBWD) – KBWD is an ETF that invests in stocks included in the KBW Financial Sector Dividend Yield Index.  The fund pays an annual dividend yield of 10.80%.

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