Several ETF sponsors have dividend paying exchange-traded funds with different approaches to choose from.
Claymore offers the Claymore/Zacks Dividend Rotation ETF (Amex: IRO). The concept behind the rotation strategy is to maximize dividend income that qualifies for taxation at the lowest current tax rates. The index is split into two approximately equal sub-indices rebalanced every two months in an effort to include only securities that are expected to pay a dividend in the following two months.
First Trust has two ETFs focused on dividends – First Trust Morningstar Dividend Leaders Index Fund (Amex: FDL) and First Trust Value Line Dividend Index Fund (Amex: FVD). The Morningstar fund replicates an index that applies a proprietary multi-step screening process to identify a universe of 100 stocks based on dividend yield. The Value Line fund tracks an index that begins with stocks with a Value Line “safety ranking” of #1 or #2 and then selects those companies with a higher than average dividend yield and equity market capitalization of greater than $1 billion.
Powershares sponsors four dividend ETFs – PowerShares Dividend Achievers Portfolio (PFM), PowerShares High Growth Rate Dividend Achievers Portfolio (PHJ), PowerShares High Yield Equity Dividend Achievers Portfolio (PEY) and PowerShares International Dividend Achievers Portfolio (PID). The four funds track indices with varying strategy combinations of dividend yield, growth and consistency.
Learn more at the sponsors’ websites: