How to Determine if Your ETFs Match Your Goals

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

This time of year — essentially the halfway point — is a great opportunity for you to do a little post-analysis of your investment holdings to see where you are, and to see if where you are is where you want to be. In today’s Weekly ETF Report video (below), I talk about the importance of performing your own personal halftime review, and I strongly encourage you to check the video out as soon as you have a chance.

One of the most important things about conducting this halftime review is to make sure the stocks, bonds, mutual funds and, hopefully, exchange-traded funds (ETFs) you own are meeting your overriding investment objectives. Yet for many investors, knowing what that objective really is can be half the battle.

For example, are you primarily a growth investor, or primarily an income investor? Are you looking to get big gains on the money you’ve invested, or are you looking to generate income from your existing assets? If you haven’t yet defined this for yourself, then you need to do so immediately. That’s because your goals will determine where you want to put your money. Stated differently, you want to make sure you have the right ETFs for your goals.

Fortunately, the ETF revolution is here, and that means there are fantastic choices out there for both growth investors and income investors. Now, this week, I want to direct our discussion to those who are primarily concerned with income generation. If this describes you, then pay particularly close attention to the following table.

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Dividend Equity ETFs

Ticker Name YTD% Yield (12M)
DIV Global X Superdividend US ETF 13.57 5.36
PSK SPDR Wells Fargo Preferred Stock ETF 10.73 6.51
PFXF Market Vectors Pref Ex-Finan 10.34 6.11
DON WisdomTree Midcap Dividend Fund 9.45 2.24
SDOG ALPS Sector Dividend Dogs 9.29 3.28
PGX PowerShares Preferred Portfolio 8.85 6.10
FDL First Trust Morningstar Dividend Leaders 8.53 2.92
PFF iShares S&P U.S. Preferred Stock 8.36 6.65
PEY PowerShares HighYield Dividend Achievers 8.10 3.26
DVY iShares Dow Jones Select Dividend Index 7.89 3.00

The ETFs here represent some of the biggest and best dividend-paying equity ETFs. These ETFs represent a variety of companies around the world, companies in well established businesses that are paying their shareholders strong dividends and that also offer very attractive dividend yields.

The stocks of companies here can perform like growth stocks, but that’s not their primary appeal. Recently, dividend stocks have shown strong capital appreciation, as evidenced by the data in the YTD% column. The performance of each of these funds is well above that of the S&P 500 Index through the first six-plus months of 2014.

High-Yield Income ETFs

Ticker Name YTD% Yield (12M)
REM iShares NAREIT Mortgage REITs Index 9.72 13.58
MORT Market Vectors Mortgage REIT 14.79 12.46
PSP PowerShares Listed Private Equity Portfolio 1.90 11.09
YYY Yield Shares High Income ETF 5.29 8.77
YMLP Yorkville High Income MLP 1.90 8.64
PCEF PowerShares CEF Income Composite 4.77 7.82
HYLD Peritus High Yield ETF 3.07 7.49
SPFF Global X Superincome Prefer 3.43 7.04
CORP PIMCO Inv Grade Corp BD 4.26 6.74
PFF iShares S&P U.S. Preferred Stock 8.36 6.65
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The table above shows some of the highest-yielding ETFs out there. The Yield (12M) column at the far right shows just how attractive — and how big — the dividend yield is on each of these ETFs. As you can see, many of these funds are offering strong year-to-date percentage returns, as well as robust dividend yields. These funds range from mortgage real estate investment trusts, or REITs, to high-yield bonds to preferred stocks to Master Limited Partnerships, or MLPs.

What is truly impressive, besides the yield, is the variety of ETFs available to those who are primarily concerned with generating income. Today, there is just no excuse for failing to achieve your income goals with ETFs.

So, if your halftime review shows your income-generating assets lacking, then it’s time to take a hard look at adding dividend-paying equity ETFs and high-yield income ETFs to your portfolio.

Aurelius on Individualism

“The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.”

–Marcus Aurelius

Sometimes, life is all about just being true to who you really are. If you are in a rut, either with your investments, your professional life or even your personal life, then maybe now is the time to break out and start to really become your own person.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Weekly ETF Report readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

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In case you missed it, I encourage you to read my e-letter column from last week about what the results of 2014’s first half mean for investors. I also invite you to comment in the space provided below.

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