![]() Expenses: The lower the expense ratio, the less of your investment that is given over to administrative costs.Volume: Trading volume over a particular period of time allows you to compare the popularity of different funds the higher the trading volume, the easier it may be to trade that fund.And the price you pay for what Morningstar calls one of the highest-quality dividend-paying ETFs on the market is a dirt-cheap 0.07% of assets. But at 3.0%, the fund’s yield trounces the Dow’s 2.4%. The fund has lagged lately, returning 14.6% over the past year, compared with 20.2% for the Dow. All told, stocks in the Dow make up 56% of Dividend Equity’s portfolio. In fact, going down the list, it takes until the eighth-largest holding to find a non-DJIA stock. Given the fund’s skew toward blue-chippers, Dow investors should not be surprised to find some familiar faces among the top holdings. Dividend 100 Index, which also screens stocks for quality factors, such as dividend yield, dividend growth rate and return on equity (a measure of profitability). A member of the Kiplinger ETF 20, the fund holds 100 large, high-quality stocks that have paid dividends for at least the past 10 years. If you like the Dow for its dividend-paying potential, consider Schwab U.S. Over that time, they’ve enjoyed a 14.8% annualized return, coming in 2.5 percentage points a year ahead of the Dow. Add in a 0.75% expense ratio and this investment looks pricey.īut investors who have owned the ETN over the past five years aren’t complaining. The shares currently trade 2.4% above the value of the underlying stocks. As a result, the ETN resembles a closed-end fund, with the fixed number of shares tending to trade above or below the actual value of the underlying stocks in the index. Furthermore, Deutsche Bank suspended issuances of the note at the beginning of 2016. This means an investor could theoretically lose money if the issuer (in this case, Deutsche Bank) defaulted. Rather, an ETN is an unsecured debt – a promise to pay the investor the index’s return, minus fees. For one thing, while ETNs mimic indexes like ETFs, they do so without actually owning the underlying stocks. But there are a few complicating factors for investors to consider. The Elements ETN seeks to make this simple strategy even simpler by doing the rebalancing for you and reinvesting the dividends. The goal is to reap a year’s worth of gains as the stocks return to form. The highest yielders, the thinking goes, are still excellent companies that have temporarily fallen out of favor. ![]() Each year, the fund invests equally in the 10 Dow stocks with the highest dividend yields. This exchange-traded note (ETN) seeks to replicate the time-honored “Dogs of the Dow” strategy. It charges expenses of 0.30% of assets.Įlements “Dogs of the Dow” Linked to the Dow Jones High Yield Select 10 Total Return Index ETN Since its debut, the ETF has trailed the SPDR fund by less than a percentage point per year, on average. Verizon Communications ( VZ), Pfizer ( PFE) and Chevron ( CVX) headline the fund, which launched in late 2015. The reshuffled portfolio yields 2.6%, compared with 2.2% for the SPDR Dow Jones Industrial Average ETF, and features bigger stakes in the technology and consumer staples sectors, with a smaller chunk dedicated to financial services firms. ![]() That’s because rather than weighting holdings by price, the underlying index ranks them by dividend yield. But even mixing the same ingredients, the Guggenheim Dow Jones Industrial Average Dividend ETF has a slightly different flavor than a straightforward Dow index fund. This ETF tracks the Dow Jones Industrial Average Yield-Weighted index, which comprises Dow stocks that have paid dividends over the past four quarters. Guggenheim Dow Jones Industrial Average Dividend ETF In addition to beating the S&P 500, the fund’s 20.0% one-year return clobbered the performances of the Wilshire 5000 Total Market index (18.5%) and the Russell 1000 stock index (17.6%). The fund seeks to track the performance of the Dow, not beat it, but lately that’s been good enough to beat broader, better-diversified market barometers. Firms with the highest stock prices take the top spots in the portfolio, with Goldman Sachs ( GS), 3M ( MMM) and Boeing ( BA) recently leading the way. Like the index it tracks, the exchange-traded fund devotes 88% of assets to giant-size firms (those with more than $89 billion in assets), compared with 40% for the average large-company stock fund. SPDR Dow Jones Industrial Average ETF holds all 30 stocks in the average and has tracked its performance accurately since the fund began in 1998. The most straightforward way to invest in the Dow is to, well, invest in the Dow.
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