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10 Dividend ETFs with Monthly Payouts
12/25/2019 5:00 am EST
Exchange-traded funds offer an easy strategy for portfolio diversification, but high monthly dividend ETFs also generate steady income distributions desired by income-seeking investors, suggests Ned Piplovic, editor of DividendInvestor.
The following 10 high monthly dividend ETFs have dividend yields that exceed 5% and should provide steady monthly income distributions to complement any investment portfolio’s capital growth strategy.
#10 — VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL)
This fund attempts to replicate the price and yield performance of the ICE BofA ML U.S. Fallen Angel High Yield Index. This index is comprised of below-investment grade corporate bonds that are denominated in U.S. dollars, issued in the U.S. domestic market and were rated as investment grade at the time of issuance.
The fund’s 195 holdings combine for more than $1.2 billion in total assets. Among the holdings, nearly 75% are U.S. securities. Most of the remaining holdings comprise investments in Italy (6.7%), the UK (6.6%), Japan (5%) and Germany (4%).
The current forward dividend yield of 5.42% contributed nearly 60% of the fund’s total returns over the trailing one-year period. The three year total return was 19% and nearly 35% over the last five years.
#9 — iShares 0-5 Year High Yield Corporate Bond ETF (SHYG)
This bond ETF seeks to track the investment results of the Markit iBoxx USD Liquid High Yield 0-5 Index, which comprises of U.S. dollar-denominated, high yield corporate bonds with remaining maturities of less than five years.
As of November 1, 2019, the fund had 636 individual holdings representing aggregate total assets of more than $3.3 billion. Equities from the Consumer Goods (26%), Communications (20%) and Energy (12%) account for more than half of total assets.
The fund’s current dividend yield of 5.47% combined with capital gains to deliver a total return of nearly 7% over the trailing 12-month period. Total returns over the last three and five years are approaching 16% and 20%, respectively.
#8 — SPDR Portfolio High Yield Bond ETF (SPHY)
The fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ICE BofAML US High Yield Index. The fund’s more than $80 million in assets comprise almost exclusively of corporate bonds from just three sectors — Industrial (88.14%), Finance (8.92%) and Utilities (2.74%).
Additionally, nearly 80% of the underlying bond have maturities between three and 10 years. The current monthly dividend distributions correspond to a 5.55% forward dividend yield. Including the fund’s share price growth, investors enjoyed a total return of nearly 10% over the trailing 12-month period and a total return of 19.5% over the past five years.
#7 — iShares Preferred & Income Securities ETF (PFF)
This ETF seeks to track the investment results of an index composed of U.S. dollar-denominated preferred and hybrid securities. As of early November 2019, this ETF held more than $16.8 billion in assets under management spread across 480 individual holding from eight countries.
The vast majority of holdings were from U.S.-based equities. Bank holdings and other diversified financial securities account for nearly half of funds securities. The fund’s current dividend payouts yield 5.6% and have combined with asset appreciation for a total return of 9.5% over the last year and 21% over the last five years.
#6 — Invesco KBW Premium Yield Equity REIT ETF (KBWY)
This fund follows the makeup and performance of the KBW Nasdaq Premium Yield Equity REIT Index. The fund generally invests at least 90% of its total assets in the securities of small- and mid-cap equity REITs that have competitive dividend yields and are publicly-traded in the U.S.
As of November 1, 2019, total net assets of more than $320 million across 29 individual holdings. For its most recent monthly payout at the end of October, the fund paid a dividend nearly 12% higher than in the previous period.
The current annualized dividend payout amount corresponds to a 6.01% dividend yield. Dividend payouts contributed most of the fund’s 7.4% total return over the last year. The fund also delivered total returns of 18.3% and 37% over the past three and five years, respectively.
#5 — First Trust Multi-Asset Diversified Income Index Fund (MDIV)
The fund generally tracks the NASDAQ US Multi-Asset Diversified Income IndexSM. The ETF allocates its total net assets — more than $735 million as of November 1, 2019 — across 125 individual holdings.
Its assets represent five equity classifications — dividend-paying equities, real estate investment trusts (REITs), preferred securities, MLPs and high-yield corporate debt ETFs — each with share of assets ranging from 18% to 22.7%. The fund currently offers a 6.07% yield that combined with asset appreciation for a 9.8% total one-year return.
#4 — VanEck Vectors Emerging Markets High Yield Bond ETF (HYEM)
This ETF uses the ICE BofAML Diversified High Yield US Emerging Markets Corporate Plus Index as the target for its performance goals. The fund invests in U.S. dollar-denominated bonds issued by non-sovereign emerging markets issuers that are rated below investment grade.
As of October 30, 2019, the fund allocated its total net assets of $312 million across 603 individual holdings. Investments in HYEM’s top four countries — China, Brazil, Turkey and Argentina — account for slightly more than 30% of the fund’s total assets.
The fund’s dividend yield of 6.16% and the modest asset appreciation delivered a combined total return of nearly 10% over the trailing 12 months and more than 21% over the past five years.
#3 — Global X SuperIncome Preferred ETF (SPFF)
The SPFF invests in 50 of the highest-yielding preferred stocks in North America, compared to the DIV’s focus on U.S. securities. SPFF tracks the S&P Enhanced Yield North American Preferred Stock Index and currently has nearly $200 million of net assets distributed across 50 securities.
Equities in the financial sector account for more than two-thirds of total assets. Including Real Estate and Energy, the top three sectors account for nearly 90% of assets. The fund currently offers a 6.28% yield and its share price has gained nearly 7.5% since the 52-week low in December-2018 for total return of more than 11% over the trailing 12-month period.
#2 — JP Morgan Emerging Markets Local Currency Bond ETF (EMLC)
With nearly $5 billion in assets under management, the ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the J.P. Morgan GBI-EM Global Core Index.
The index comprises bonds issued by emerging market governments and denominated in the local currency of the issuer. Top ten of the ETF’s 296 current holding account for 13.4% of the fund’s total assets.
Almost all holdings (99.4%) comprise government issued securities, with a fraction of the assets in securities issued by private entities in the Industrial, Finance, Utilities and Energy sectors. Of the 19 countries represented in the fund, Brazil (10.09%), Mexico (9.39%) and Indonesia (9.26%) are the top three and collectively account for nearly 30% of all assets.
The fund has a current yield of 6.38% combined with a recovering share price to deliver an 11% total return over the past year, which is higher than the 7.8% total return over the three-year period.
#1 — Invesco CEF Income Composite ETF (PCEF)
This fund tracks the S-Network Composite Closed-End Fund IndexSM. The fund generally invests at least 90% of its total assets in securities of funds included in the Index. The Fund is a “fund-of-funds,” as it invests its assets in the common shares of funds included in the Index rather than in individual securities.
As of November 1, 2019, the PCEF fund had approximately $770 million in total assets allocated across 136 individual holdings. The fund’s top five holdings represent just 12.6% and the top 25 holdings account for less than 45% of total assets. PCEF share price rose more than 17% since its 52-week low in late-December 2018. With a 7.21% forward dividend yield, the fund delivered a 13.2% total return over the trailing 12-months.
The list of the top 10 Monthly Dividend ETFs above ranks the funds solely by their current forward dividend yield. Investors should conduct their own due diligence to confirm that the various funds’ other metrics, such as share-price trend, payout ratios, long-term and short-term total returns, etc., support their portfolio strategies and choose their investment equities accordingly.
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