Dividend "Achievements"

03/31/2006 12:00 am EST


Doug Fabian

Editor, Successful ETF Investing, ETF Trader's Edge, Weekly ETF Report, and ETFU.com

"Dividend investors are an impatient sort, always seeking out ways to get more out of their money," notes Doug Fabian, editor of The ETF Trader. "Fortunately, the quest for high-paying investments has not gone unnoticed by one ETF provider, PowerShares."

"PowerShares' ETFs are not like conventional ETFs, in that they are not directly tied to an index such as the S&P 500, Nasdaq 100, etc. At the same time, they aren't constructed at the whim of a portfolio manager either. PowerShares' fund offerings are still objectively managed, but they are based on what the company calls its intelligent indexes, or ‘Intellidexes’ of specific market segments. According to PowerShares, this methodology chooses stocks for their capital appreciation potential, evaluating and selecting stocks based on multiple valuation criteria.

"What this translates to is a selection of the most attractive stocks in a particular market segment, and not just the stocks that happen to comprise a given industry. It's kind of a ‘best of the best’ representation of specific areas of the market. A few months ago PowerShares rolled out several new dividend-based ETFs to go along with their one existing dividend offering, the PowerShares High Yield Dividend Achievers (PEY ASE), introduced back in December of 2004.

"The first new offering is the PowerShares Dividend Achievers (PFM ASE). The salient feature of PFM is that it only includes companies that have increased their annual dividend for ten or more consecutive fiscal years. The second new offering is the PowerShares High Growth Rate Dividend Achievers (PHJ ASE). This ETF concentrates on the 100 companies with the highest ten-year annual dividend growth rates.

"In my view, the most interesting of the new funds is the PowerShares International Dividend Achievers (PID ASE). This fund is made up of international stocks and American Depositary Receipts (ADRs) that have increased their annual dividend for five or more consecutive fiscal years. If you are a dividend investor in search of better returns, check out these three new PowerShares offerings."

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