Back to top

5 High Dividend ETFs Off to a Great Start in 2018

Read MoreHide Full Article

The key U.S. equity gauges are on cloud nine at the start of 2018 on economic improvement and the tax reform passed at the end of 2017. The optimism around the economy and the stock market is so high that the San Francisco Fed President John Williams recently talked about the strength in the world's largest economy which is likely to operate “at or near its full capacity over the next few years.”

Williams forecast that unemployment may decline to 3.7% in 2018 without any risk of a troublesome shoot-up in inflation. The policymaker sees three rate hikes as sensible in 2018. Williams expects tax cuts should have a "modest, positive effect" on economic growth over the next three years thanks to greater consumer spending and business investment.

On the other hand, Federal Reserve Bank of Cleveland President Loretta Mester expects around four interest-rate hikes this year, thanks to strength in the economy and labor market. With both Fed bodies having a vote on Fed policy this year under rotation, such comments are quite capable of impacting the bond market.

U.S. Treasury bond yields shot up to start 2018. As of Jan 8, 2018, the yield on the benchmark 10-year Treasury note was 2.49% while the year started with a benchmark bond yield of 2.46%.

So, investors must be in search of dividend ETFs that offer benchmark-beating yields. After all, high-dividend ETFs provide investors avenues to make up for capital losses, if that happens at all.

Also, dividend investing calls for value investing. Since in its northbound journey, stock valuation got elevated, a value quotient will boost investors’ portfolio at the current level. Below we are pointing out high-dividend funds that have generated decent returns so far this year (as of Jan 8, 2018).

Global X SuperDividend ETF (SDIV - Free Report) – Up 1.3%

The underlying index of the fund looks to track the performance of 100 equally weighted companies that rank among the highest dividend yielding equity securities in the world. United States accounts for about 46% of the weight followed by Australia (13.71%) and Singapore (7.90%). It yields about 6.57% annually (as of Jan 8, 2018) (read: 5 Hot Global Dividend ETFs).

iShares International Select Dividend ETF (IDV - Free Report) – Up 2.6%

The underlying index measures the performance of a select group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time. United Kingdom (24.09%), Australia (15.4%) and France (10.2%) hold the top three positions in the fund. The product yields about 4.41% annually (read: Bet on 4 Global ETFs to Earn at Least 4% Yield).

WisdomTree International Dividend Ex-Financials Fund (DOO - Free Report) – Up 3.3%

The index measures the performance of high dividend-yielding international stocks outside the financial sector. United Kingdom (18.35%), Japan (17.04%) and France (13.2%) hold the top three spots in the fund. The fund yields about 3.54% annually.

WisdomTree Emerging Markets High Dividend Fund (DEM - Free Report) – Up 3.4%

The underlying index of the fund is fundamentally weighted and measures the performance of the highest dividend yielding stocks of emerging markets. Companies are weighted in the index based on annual cash dividends paid. Taiwan (25.81%), China (16.3%), Russia (13.8%) and South Africa (12.4%) hold the top four spots in the fund. It yields about 3.55% annually.

PowerShares CEF Income Composite Portfolio (PCEF - Free Report) – Up 0.8%

The underlying index includes closed-end funds that invest in taxable investment grade fixed-income securities, taxable high yield fixed-income securities and others that utilize an equity option writing strategy. The fund yields 6.90% annually.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

More from Zacks ETF News And Commentary

You May Like