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These Five ETFs Provide Solid Monthly Dividends

Thursday, October 13, 2016 7:33
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DividendsFrom David Fabian: Income investors are typically comforted by the reliability of monthly dividends.  This consistent stream of payments is common among bond funds as a steady source of passive income.

However, there are much longer gaps in the cash flow cycle from the majority of stock-focused ETFs that pay quarterly dividends.  This creates a lumpy pattern over the course of a calendar year that may be inconsistent with fixed budgets and other financial projections.

Fortunately, there are a variety of stock-focused ETFs that have set out to solve this issue by declaring smaller monthly payments rather than larger quarterly deposits.  This creates a smoother flow of income and allows for easier forecasting of spendable portfolio yield.

The following list of funds are some of the larger and more established offerings in this group.

SPDR Dow Jones Industrial Average ETF (DIA)

DIA tracks the famous Dow Jones Industrial Average, which been in existence for over 130 years.  This historic index is made up of 30 mega-cap stocks from virtually every sector of the economy and is still considered a major domestic benchmark.

Interestingly enough, DIA is constructed using a price-weighted asset allocation structure.  This gives the largest share of capital to the stocks with the largest share prices rather than market capitalization.  Top holdings in DIA currently include 3M Company (MMM) and Goldman Sachs Group Inc (GS).

DIA has $11.8 billion in total assets and charges an expense ratio of just 0.17%.  This low-cost exchange-traded fund offers a 30-day SEC yield of 2.43% and income is paid monthly to shareholders.

PowerShares S&P 500 Low Volatility Portfolio (SPLV)

Another popular option for conservative stock investors to contemplate is SPLV.  This unique ETF screens for 100 stocks within the S&P 500 Index with the lowest volatility over the preceding 12-months.

The goal is to minimize downside relative to the broader market by selecting stocks with a historical penchant for reduced price fluctuations.  Each of the final constituents are then given an equal share of fund assets and rebalanced on a quarterly basis.

SPLV has $6.7 billion in total assets and charges an expense ratio of 0.25%.  The fund offers a 30-day SEC yield of 2.32% and income is paid each month.

PowerShares S&P 500 High Dividend Low Volatility Portfolio (SPHD)

SPHD takes a multi-factor approach by screening the S&P 500 Index for the highest paying dividend stocks.  It then filters that group through by lowest overall volatility to come up with 50 stocks that meet these dual criteria.  The end result is a basket of large-cap companies that provide a high income stream and have shown to have lower up/down price movement than their peers.

Like DIA, this high dividend ETF is more concentrated than many broad, multi-sector indexes.  However, it offers a unique dynamic for investors that are searching out stocks with these embedded characteristics.

SPHD current has $2.7 billion in total assets, charges an expense ratio of 0.30%, and sports a healthy 30-day SEC yield of 3.79%.  Income from SPHD is paid monthly to shareholders and has demonstrated a steadily increasing trend higher over the last several years.

WisdomTree Large Cap Dividend Fund (DLN)

WisdomTree is an ETF company well-known for their smart beta dividend strategies and DLN is a top example of that process.  This fund has $1.9 billion dedicated to nearly 300 large-cap dividend paying stocks in the United States.

The much broader scope of companies included in DLN make this offering appropriate for investors seeking a diversified value or dividend-focused fund.  This ETF currently offers a 30-day SEC yield of 2.78% and income is deposited monthly.

WisdomTree Small Cap Dividend Fund (DES)

The last fund to grace this list is a unique outlier because of its emphasis on smaller companies.  DES is another WisdomTree ETF with a monthly dividend yield that seeks out over 650 small cap stocks in the United States.  The index is dividend weighted to provide the companies with the strongest yields the greatest share of overall assets.

A fund of this nature may be appropriate for investors that want to round out their stock exposure to include a broader swath of the domestic stock market.  DES has $1.6 billion in total assets, charges an expense ratio of 0.38%, and offers a 30-day SEC yield of 3.13%.

This article is brought to you courtesy of FMD Capital.

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