Monday, May 24, 2010

Top Yielding ETF's

ETFs, also known as Exchange Traded Funds, are not just for traders; many of them generate significant income. However, there are actually dozens of ETFs which pay dividends, and has turned up more than 15 with yields above 3%. Other advantages to the income ETFs are the diversification of securities in the portfolio and the liquidity, better than a bond mutual fund. There are several ETF categories to choose from including high yield bond, real estate, and emerging markets bond. Here are a few examples.

The PowerShares High Yield Corporate Bond (PHB) ETF pays a yield of 8.5%, and attempts to track the Wachovia High-Yield Bond index. The fund has been paying monthly dividends since December of 2007.

The iShares S&P U.S. Preferred Stock Index (PFF) ETF yields 7.4% tracking the S&P U.S. Preferred Stock Index. They have been paying dividends almost every month since May 2007. The ETF specializes in preferred stocks.

A way to get worldwide diversification is through the PowerShares Emerging Markets Sovereign Debt ETF (PCY) which invests in emerging markets bonds. It currently yields 6.3%.

Do your homework on these ETFs before investing, especially the yield calculations, since many of the yields are based on recent higher than typical dividends that may not be maintained in the future. Always check the historical dividend payment history. A good starting point for high yield ETF ideas is the free database at, which can be downloaded, sorted, added to, and changed.

Author does not own any of the above.


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