In this week’s Macro Theme, we review our “Slowing Dragon” theme. We began discuss...
"Core" ETF for High Dividends
04/14/2017 2:50 am EST
The iShares Core High Dividend ETF (HDV) is a new recommendation, with a higher yield than most ETFs out there. It's made up of 98% stocks. It's returned 46% in the past five years, 58% over the last 10 - not including the generous 3.2% dividend yield.
The investment is tied to the Morningstar Dividend Yield Focus Index composed of relatively high dividend-paying U.S. equities. It consists of 75 stocks that are weighted in proportion to the total pool of dividends available to investors
The company notes that dividends are one of the few constants in the world of investing, contributing about a third of the stock market's total returns historically.
Dividend-paying stocks offer solutions to several investment problems. Over long time periods, for example, they can help smooth a portfolio's returns, thanks to their predictable dividend payments.
They can also provide much needed income in low interest rate climates. And they can fill a psychological gap: When the bulk of a stock's return is built with steady dividends, there's less reason for investors to sell at every bump in the road.
That's pretty much our investing philosophy. You can't go wrong in the long run with an ETF like this. We're buying for the long haul.
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