Top 10 Established Dividend ETFs (2024)

This posting features a comprehensive review of the established dividend ETF sector. In this view we feature those dividend related ETFs that have a more conservative list of constituents and have been in existence for more than a few years. There are dozens within the category with more on the way. To simplify matters for investors we've whittled choices down to 10. The issues chosen represent a broad cross section of domestic, global, overseas, real estate (REITs) and other sectors from a variety of sponsors. Doing so makes sorting through the sector more manageable for most investors.

Within each category we filter them by placing importance on high assets under management, liquidity and/or strategies that make a difference being the most critical criteria. Newer issues tied to indexes with long (over 5 years) of historical data may be worth investigating, featuring and using indexes as alternative evaluations if the linked ETF has a short trading history.

Even as many equity markets overall have improved returns over the past several years we've noticed a large shift from conventional equity sectors to dividend and income sectors. This is easily noted by fund flows and a rapidly expanding selection of new income oriented ETF issues. This focus is due to current demographics with an aging population as investors gravitate to safer and more conservative dividend and income sectors.

Remember just searching for the highest dividend yields can lead to troubled sectors where the ability to maintain the dividend may become questionable. Investors' reaching for yield is common now given low overall yields. We have a separate high yield category featuring those ETFs profiled in another review.

We choose not to rank these issues allowing to investors to find those that best match their needs.

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as a bargain and sell for other reasons when high; but, this is not our approach. Premium members to the ETF Digest receive added signals when markets become extended such as DeMark indicators to exit overbought/oversold conditions.

XLU (SPDR Utilities Sector ETF) follows the Utilities Select Sector Index. This sector remains the historical first choice for investors seeking stable dividend income with the potential for long-term growth in value and increases in dividends. The fund was launched December 1998. The expense ratio is 0.18% AUM (Assets under Management) equal $5.6 billion and average daily trading volume is less than 9M shares. As of early March 2013 the annual dividend yield is 3.00 % and YTD performance 7.38%. The one year return is 10.55%.

Data as of First Quarter 2013

XLU Top Ten Holdings & Weightings

DVY (iShares Dow Jones Select Dividend ETF) follows the Dow Jones Dividend Select Index. The fund was launched in November 2003. This is the oldest of the established dividend ETFs and most popular by assets. Now with yields low and fees high one might consider this as an issue. The expense ratio is 0.40%. AUM equal $11 billion and average daily trading volume exceeds 1M shares. As of early March 2013 the annual dividend yield is 3.47% and YTD performance 6.60%. The one year return is 14%.

Data as of First Quarter 2013

DVY Top Ten Holdings & Weightings

DTD (Wisdom Tree Total Dividend Fund) follows the WisdomTree Dividend Index which is a fundamentally-weighted index that defines the dividend-paying portion of the U.S. stock market. The Index measures the performance of US companies, listed on the NYSE, AMEX or NASDAQ Global Market, that pay regular cash dividends and that meet other liquidity and capitalization requirements established by WisdomTree. The fund was launched in June 2006. The expense ratio is 0.28%. AUM equal $285M and average daily trading volume exceeds 35K shares. As of early March 2013 the annual dividend yield is 3.11% and YTD performance 6.5%. The one year return is 13.30%.

Data as of First Quarter 2013

DTD Top Ten Holdings & Weightings

CVY (Guggenheim Multi-Asset Income ETF) follows the Zacks Multi-Asset Income Index which is designed to identify and track companies with high income and positive risk/reward characteristics. The fund was launched in September 2006. The expense ratio is 0.60%. AUM equal $720M and average daily trading volume exceeds 270K shares. Many people like the multi-asset class approach given uncorrelated constituents. As of early March 2013 the annual dividend yield is 5% and YTD performance 6.40%. The one year return is 11%.

Data as of First Quarter 2013

CVY Top Ten Holdings & Weightings

DHS (The WisdomTree High Yielding Equity ETF) follows the Wisdom Tree Equity Income Index which is a fundamentally weighted index measuring the performance of companies with high dividend yields selected from the WisdomTree Dividend Index. At the index measurement date, companies within the WisdomTree Dividend Index with market capitalizations of at least $200 million and average daily trading volumes of at least $200,000 for the prior three months are ranked by dividend yield. The fund was launched in June 2006. The expense ratio is 0.38%. AUM equal $590M and average daily trading volume is over 85K shares. As of early March 2013 the annual dividend yield is 4% and YTD performance 7.8%. The one year return is 16.25%.

Data as of First Quarter 2013

DHS Top Ten Holdings & Weightings

DTN (Wisdom Tree Dividend ex-Financials ETF) index measures the performance of high dividend-yielding stocks outside the financial sector. The index consists primarily of large- and mid-capitalization companies listed on major U.S. stock exchanges that pass WisdomTree Investments market capitalization, liquidity and selection requirements. The fund was launched in June 2006. The expense ratio is 0.38%. AUM equal $1 billion and average daily trading volume is over 185K shares. As of early March 2013 the annual dividend yield is 4.3% and YTD performance 7.10%. The one year return is 13.70%.

Data as of First Quarter 2013

DTN Top Ten Holdings & Weightings

VIG (Vanguard Dividend Appreciation ETF) follows the Broad Dividend Achievers Index which features constituent companies with a history of increasing dividends. It was launched in April 2004. The expense ratio is 0.13%. AUM equals $13 billion and an average daily trading volume of 1.3M shares. As of early March 2013 the annual dividend yield is 2.21% and YTD performance 7.45%. The one year return was 13.55%

An alternative consideration would be VYM (Vanguard High Dividend Yield ETF). It follows the FTSE High Dividend Yield Index which consists of large-cap issues from global companies ex-REITs. The fund was launched in November 2006. The expense ratio is 0.18%. AUM equals $5 billion and average daily trading volume is roughly 685K shares. As of early March 2013 the annual dividend yield is 3% and YTD performance 8%. The one year return is 15.5%.

Data as of First Quarter 2013

VIG Top Ten Holdings & Weightings

FDL (First Trust Morningstar Dividend Leaders ETF) follows a modified market capitalization weighted index of publicly traded companies that have shown dividend consistency and dividend sustainability. Morningstar identifies a universe of eligible companies through the application of its proprietary multi-step screening process and selects the top 100 stocks, based on dividend yield, for the index. The fund was launched in March 2006. The expense ratio is 0.45%. AUM equal over $545M and average daily trading volume is over 235K shares. As of early March 2013 the annual dividend yield is 3.6% and YTD performance 7.20%. The one year return is 16.66%.

Data as of First Quarter 2013

FDL Top Ten Holdings & Weightings

VNQ (Vanguard Real Estate ETF) follows the MSCI US REIT Index which is a benchmark of U.S. property trusts that covers about two-thirds of the value of the entire U.S. REIT market. The fund was launched in September 2004. The expense ratio is 0.12%. AUM equal $17 billion and average daily trading volume is 2.5M shares. As of early March 2013 the annual dividend yield is 3.35% and YTD performance 5.35%. The one year return is 17%.

IYR (iShares Dow Jones U.S. Real Estate ETF) follows the index of the same name. Risks for the sector are higher due to most assets consist of REITs (Real Estate Investment Trusts) which are much more volatile and economically sensitive. It's said that over the next 5 years REITs have $3 trillion in outstanding debts due or refinance. The fund was launched in June 2000. The expense ratio is 0.48%. AUM equal $5.5 billion while average daily trading volume is nearly 8.5M shares. As of early March 2013 the annual dividend yield is 3.52% and YTD performance 5.50%. The one year return is 17.20%.

Remember with both ETFs return of principal can be part of the yield. Further, both ETFs have related characteristics for trading more aggressively to both leveraged long and short DirexionShares ETFs (DRN & DRV) and ProShares (URE & SRS).

Data as of First Quarter 2013

VNQ Top Ten Holdings & Weightings

RWX (SPDR Wilshire International Real Estate ETF) follows the Dow Jones Global ex-U.S. Real Estate Securities Index which basically consists of REITs in developed and emerging markets. It was launched in December 2006. The expense ratio is 0.59%. AUM equal $3.6 billion while average daily trading volume is over 600K shares. As of early March 2013 the annual dividend yield is 6.50% and YTD performance 1.74%. The one year return was 22.20%.

Data as of First Quarter 2013

RWX Top Ten Holdings & Weightings

SUMMARY

The business for income oriented ETFs among issuers is booming. It's doing so to meet the changing demographics and demands of retiring, or soon to be, retiring baby boomers. It's this generation which drove the bull market in equities that began in 1982 combined with IRA and other retirement accounts. Now boomers want a more conservative approach and income which is logical. Also, enduring two bear markets in the last decade has most likely enhanced the desire for a more conservative investment approach.

You should try to note firms with commission free trading and study fee structures. Some with ultra low fees don't necessarily produce the best results.

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The ETF Digest has current positions in VNQ and CVY in the featured ETFs.

(Source for data is from ETF sponsors and various ETF data providers)

Disclosure: I am long VNQ, CVY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

David Fry writes a subscription newsletter focused on technical analysis of exchange-traded funds, called ETF Digest (www.etfdigest.com). Dave founded the ETF Digest in 2001 and was among the very first to see the need for a publication that provided individual investors with information and actionable advice on global ETF investing.We particularly like the overview of financial markets that his work provides. Even if you're not a fan of chart analysis, Dave provides insight and commentary into which global markets are "working" and why.Specializing as a market strategist and tactician, Fry focuses on evaluating, creating and implementing a variety of ETF portfolios for individual investors and financial professionals. His philosophy and approach incorporates fundamental with technical analysis in pursuit of risk management and capital preservation especially during uncertain and volatile times. His new eBook, The Best ETFs: U.S. Equities,is now available on Amazon Kindle. Written as a cheat sheet to only the best ETFs for you or your client’s portfolios. For those that don't have a Kindle, you can purchase the pdf here: The Best ETFs: US Equities [https://gumroad.com/l/The%20Best%20ETFs]