The last exchange-traded fund (ETF) recommendation in this series for income and dividend-focused investors is the iShares Select Dividend ETF (DVY). DVY is a big player in the land of dividend-focused ETFs, as it gives investors exposure to the biggest and arguably the best dividend-paying stocks in the market today.
As financial markets struggle to make headway of any sort, dividends are gaining appeal among investors as an alternative way to generate income. DVY tracks the Dow Jones U.S. Select Dividend Index, which is a compilation of broad-cap U.S. companies that are known for their fairly high payouts. In addition, DVY offers exposure to 100 companies that have paid out dividends for at least five years.
Although DVY was down some 5% in 2015 and has lost 3% so far in 2016, the fund’s losses have been far less substantial than some of the double-digit percentage hits many sectors and companies are reporting. This is likely because DVY has significant exposure to both the utilities and consumer staples sectors (35.32% and 12.82%, respectively), which are generally two of the more stable areas of the market. In addition, DVY’s dividend yield sits at a solid 3.5%, with $13 billion in assets managed and an expense ratio of 0.39%.
While DVY’s total assets are largely invested in positions in the dividend index it tracks, individual holdings are quite small, measuring no more than around 4% each. The fund’s most significant holdings include big-name companies such as Lockheed Martin (LMT), 4.09%; Philip Morris (PM), 2.84%; McDonald’s (MCD), 2.56%; and Clorox (CLX), 2.21%.
If exposure to high-paying dividend stocks seems like a good way to recover your hard-earned capital right now, the iShares Select Dividend ETF (DVY) could a good first step toward that goal.
Stay tuned for next week, where I will present my first ETF pick in a series aimed at growth-oriented investors!
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