Top Dividend Income Funds

Reviewed: November 21, 2014
By FinanceWeb

Any review of top dividend income funds must include ETF’s that dedicate themselves to high yield dividend strategies. The purpose of these easily traded funds is to extract profits. The philosophy is a simple one, the future of the market is always an unknown, and the only sure gains are those that one takes out as profits. The emphasis on profits through dividends does not sacrifice equity, but it does place a greater priority on profits. Many experts consider portfolio balance to be a product of investment goals. An emphasis on dividends and profits serves many investment strategies.

Leading Funds and High Yield Indexes

ETRACS Monthly Pay 2xLeveraged Dow Jones Select Dividend Index ETN follows the impressive long-term performance of the High Yield Dividend Aristocrats Index. This high yield S& P index replicates a selection of the S&P Composite 1500 Index. The key characteristic is consistent dividends; it offers consistent increases over a twenty-five year period. Its year to date return is in the range of 24 percent. The WisdomTree Middle East Dividend Fund (GULF) has a one-year return at slightly more than 24 percent. This fund tracks the energy-based wealth of the Middle East such as Qatar, the UAE, and Kuwait. It has few direct energy involvements, rather it seeks to track the corporate and technological developments that arise from the energy foundation. The impressive growth in telecommunications, infrastructure, and financial services are part of a broad regional movement with a firm idea of the future.

Comparing ETFs

One way to analyze top dividend income funds is to compare the performance with the overall market. There are some excellent indexes for making a broad market comparison like the S&P 500 and the DJIA. If one wishes to compare a high-yield dividend fund with a particular market involved such as emerging markets, there are effective collections of stocks and bonds for that purpose such as the MSCI Emerging Markets Index.

A Flexible Investment Tool

Every portfolio can add top dividend income funds, and ETF’s offer advantages that can be part of a balanced mix of selections. One can analyze every investment decision in terms of overall goals and ETF’s offer something valuable for nearly every investment strategy. Risk reduction is a widely shared goal; those near retirement seek steady income and high yields. Those building their portfolio can reinvest gains and accelerate a long-term growth strategy by diversifying an equity-oriented portfolio.

Some Top dividend ETFs

Diversity is a desirable factor in any investment as it tends to reduce risks. However, some fairly narrow scope funds offer impressive results. iShares S&P U.S. Preferred Stock Index Fund (PFF) offers a narrow scope for investors with a concentration in preferred shares and a heavy weight of financial services stocks. Some experts note that preferred stocks show more like bonds than common stocks. They rise and fall in value inversely to interest rate cycles. With low fees and a superior performance to the S&P 500, this fund offers a track record that should appeal to those seeking high yields in the seven percent range. If one seeks high yields and equity growth, the Guggenheim Multi-Asset Income ETF offers some potential for growth along with a record of high yields. It tracks a mix of common and preferred stocks along with other assets like real estate investment trusts. It has a number of closed-end funds. With a fixed number of shares, usually through an IPO, these closed-end funds trade like shares thereafter.