Investors Need To Pay More Attention To Dividend ETFs In 2010

“Stocks delivered nicely in 2009, with the S&P 500 ETF (NYSE:SPY) shooting up an impressive 23.5% and emerging markets were even more impressive. Even bond investors in high yield and junk debt performed admirably throughout the year. The real question now, is what will 2010 hold for investors? As April 2010 approaches, some trends are beginning to take form. Investors are warming up to dividends and stable blue chips once again as they look to stem their risk profiles. And they have good reason to do so,” Aaron Levitt Reports From Investopedia.
 
Levitt goes on to say, “When markets are booming, little to no one pays attention to dividends. Capital gains become cocktail party flavor. After all, talking about insurer Alleghany (NYSE:Y) and $300 a share price tag isn’t as exciting as saying you bet the farm on some small cap and won. However, investors should be paying more attention to dividend stocks in the coming years. The markets have history on their sides. Since 1928, the years following gains of 20% or more in the market have produced similar gains only 6% of the time. History shows that the odds are in favor for more modest returns from stocks, making dividends all that more valuable.”

“In addition, dividend stocks could be a great contrarian bet. Through 2009, S&P 500 companies paid out $196 billion in cash dividends, nearly $52 billion less than in 2008. Those two-third or so companies in the S&P that did pay those dividends under-performed those stocks that held onto their cash. Including corporations that reinvested dividends, that group booked 21% gains versus 54% gains for non-payers. Dividend payers are still cheap relative to their non-paying twins and that divide maybe shrinking. With the first quarter almost over, 75 companies in the S&P have increased their dividend rates, and more are sure to follow as dividends are a sign confidence in the overall health of the economy,” Levitt Reports.

It’s time to look into dividend investing and here are two dividend focused ETFs that we thought we would share with our readers.  We have provided some details on each one including the iShares Dow Jones Select Dividend ETF (NYSE:DVY) & the SPDR S&P Dividend ETF (NYSE:SDY) below:

The investment (DVY) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Select Dividend index. The fund generally invests at least 90% assets in securities of the underlying index and depositary receipts representing securities of the underlying index. It may invest the remainder of its assets in securities not included in its underlying index but which BGFA believes will help the fund track its underlying index, and in futures contracts, options on futures contracts, options and swaps as well as cash and cash equivalents.

The investment (SDY) seeks to replicate, before expenses, correspond generally to the price and yield of the S&P High Yield Dividend Aristocrats index. The fund uses a passive management strategy designed to track the price and yield performance of the Dividend index. It is nondiversified.

Related posts:

1. Become A Dividend Focused Investor In 2010 With These ETFs
2. Dividend Based ETFs and New Options Listed on the S&P 500 Dividend Index
3. A Dividend ETF Disappoints

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