Tired of the very low yields in the Treasury markets? MoneyShow’s Tom Aspray suggests you take a look at these three income ETFs that can give you well-diversified exposure to some of the top dividend-paying stocks.
The yield on the ten-year Treasury Note closed Monday at a new low yield of 1.464%, which was just slightly below the June 1 low of 1.467%. This is a sign that many investors are still clearly nervous, opting for safety even if it means a negative total return.
Still, the stock market has held up surprisingly well. The last time yields were this low, the Spyder Trust (SPY) closed at $128.16, 5.4% below Monday’s close.
For those who do not have the resources or time to invest in individual stocks, the high-yield ETFs are an attractive alternative. All have low expense ratios and contain many of the stocks that I like individually on a technical basis. Several of these ETFs have very good-looking charts, and their relative performance suggests they are acting stronger then the S&P 500.
Chart Analysis: The iShares High Dividend Equity Fund (HDV) has a current yield of 2.93% with an expense ratio of 0.4%. HDV tracks the Morningstar Dividend Yield Focus Index, which follows companies that have a consistent pattern of high dividends. So far in 2012, DHV has returned over 8%, assuming the reinvestment of dividends.
The Vanguard Dividend Yield ETF (VYM) has a current yield of 2.87% with a very low expense ratio of 0.13%. It concentrates on stocks with higher than average dividends, and so far in 2012 is up about 6.4%.