Dividend ETFs
I realize some investors out there may be interested in investing in dividend stocks but may not be ready to purchase their own stocks and manage their own portfolio. Additionally some investors may not have the time or want to select their own stocks but want the benefits of investing in dividend stocks. Exchange Traded Funds (ETFs) are a great way way for investors to participate in stocks but not have the burden of selecting individual stocks.
First a definition of ETF. An ETF is a group of stocks similar to a mutual fund except ETFs are traded on the stock exchange like other company stock. Most ETFs are based on a stock index such as the S&P 500.
ETFs provide more flexibility since you can trade them on the stock market any time during the day. Low costs are another advantage of ETFs because their expenses are typically lower than mutual funds including index funds.
To get the maximum cost saving with ETF, look at using a low cost or no cost broker. Vanguard charges no commission to trade shares of their ETFs and Fidelity offers no commission on many iShares ETFs. Even with low fees, brokerage commissions can seriously erode ETF benefits when investing small sums of money.
The number of Dividend ETFs has been exploding with more coming to market each month. One of the oldest is iShares Dow Jones Select Dividend Index (DVY) from BlackRock. DVY was started in 2003 and has more than $6 billion in assets. One of the newest ETFs is the iShares High Dividend Equity Fund (HDV) which seeks to replicate the performance of the Morningstar Dividend Yield Focus Index.
Most Dividend ETFs can thank the Jobs and Growth Tax Relief Reconciliation Act of 2003 for their popularity. This tax act was signed into law in May of 2003 and lowered the tax rate on dividends to 15%. REIT's and foreign company dividends were excluded from the lower tax rate of this law.
Here are links to some popular Dividend ETFsDVY iShares Dow Jones Select Dividend Index
SDY SPDR S&P Dividend ETF
VIG Vanguard Dividend Appreciation
VYM Vanguard High Dividend Yield
DTN WisdomTree Dividend Top 100
FDL First Trust Morningstar Dividend Leaders
PEY Powershares High Yield Dividend Achievers
Here are links to some of the major providers of ETF's.
BlackRock iShares
Vanguard
Invesco PowerSharesState Street Global Advisors SPDR
WisdomTree
Disclosure: The Div Guy owns shares of dividend ETF IDV - iShares Dow Jones International Select Dividend Index Fund
ETFs provide more flexibility since you can trade them on the stock market any time during the day. Low costs are another advantage of ETFs because their expenses are typically lower than mutual funds including index funds.
To get the maximum cost saving with ETF, look at using a low cost or no cost broker. Vanguard charges no commission to trade shares of their ETFs and Fidelity offers no commission on many iShares ETFs. Even with low fees, brokerage commissions can seriously erode ETF benefits when investing small sums of money.
The number of Dividend ETFs has been exploding with more coming to market each month. One of the oldest is iShares Dow Jones Select Dividend Index (DVY) from BlackRock. DVY was started in 2003 and has more than $6 billion in assets. One of the newest ETFs is the iShares High Dividend Equity Fund (HDV) which seeks to replicate the performance of the Morningstar Dividend Yield Focus Index.
Most Dividend ETFs can thank the Jobs and Growth Tax Relief Reconciliation Act of 2003 for their popularity. This tax act was signed into law in May of 2003 and lowered the tax rate on dividends to 15%. REIT's and foreign company dividends were excluded from the lower tax rate of this law.
Here are links to some popular Dividend ETFsDVY iShares Dow Jones Select Dividend Index
SDY SPDR S&P Dividend ETF
VIG Vanguard Dividend Appreciation
VYM Vanguard High Dividend Yield
DTN WisdomTree Dividend Top 100
FDL First Trust Morningstar Dividend Leaders
PEY Powershares High Yield Dividend Achievers
Here are links to some of the major providers of ETF's.
BlackRock iShares
Vanguard
Invesco PowerSharesState Street Global Advisors SPDR
WisdomTree
Disclosure: The Div Guy owns shares of dividend ETF IDV - iShares Dow Jones International Select Dividend Index Fund