In term of interest rates, banks are still paying
next to nothing.
So, you’ll have to look elsewhere if you want to earn
a decent return on your money.
So, today, I’m featuring four Exchange-Traded-Funds
(ETFs) that pay monthly dividends ranging from 4.9% to 8.2% annual
Given that many folks, including me, consider the
current stock market to be overheated, I’ll focus on relatively
Beta Equals Low Risk
I’ll use “beta,” a volatility gauge, to measure risk.
For beta, the higher the number, the higher the risk. Most analysts
consider stocks or funds with beta below 1.0 to be low-risk, so I’ll
confine my list to ETFs with betas below that number.
So, in a minute, I’ll describe four relatively
low-risk ETFs that pay monthly dividends equating to 4.9% to 8.2%
dividend yields. But first, some things
you need to know.
About ETF Dividend Yields
Unlike most dividend paying mutual funds and common
stocks, ETFs typically don’t pay fixed monthly dividends. Instead
their payouts vary from month to month. So, we have to calculate ETF
dividend yields by
comparing an ETF’s last 12-month’s total dividend
payouts to its recent share price. For example, the yield would be
10% for a fund that paid dividends totaling $1.00 per share over the
past year and recently traded at $10.00 per share.
Evaluating Return Numbers
As is the case for
all dividend paying securities, returns include dividends received
plus share price appreciation over the covered period. You will
notice that the ETF 12-month return figures listed for the ETFs are
abnormally high. That’s because last year the market bottomed in
mid-March and was still near that low in mid-April. In fact, as of
April 20, the S&P’s 12-month return was 48%. So, pay more attention
to the three year average annual return numbers.
With that in mind,
here are the ETFs.
Four Low-Beta ETFs
Amplify CWP Enhanced Dividend Income
(DIVO): Actively managed, the fund holds mostly large-cap stocks
with strong dividend growth track records. The fund pays a 4.9%
dividend yield and has returned 41% over the past 12-months, and
averaged 15% annually over the past three years. Beta is 0.8.
Xtrackers J.P. Morgan ESG USD High Yield Corporate Bond (ESHY):
Tracks an index of high-yield (junk-rated) corporate bonds issued by
firms not deriving revenues from coal, tobacco, or weapons. It pays
a 5.8% dividend yield and returned 20% over the past 12-months and
averaged 4% annually over three-years. Beta is 0.1.
Saba Closed-End Funds (CEFS):
Actively managed, the fund holds closed-end funds trading at
discounts to their net asset values. It actively trades the
portfolio to maximize discounts to net asset values. It pays an 8.2%
dividend yield and returned 41% over 12-months and averaged 10%
annually over three years. Beta is 0.4.
Strategy Shares NASDAQ 7HANDL (HNDL):
Portfolio holds a balanced portfolio of U.S. equities, bonds and
alternative investments, and employs leverage (23%) to enhance
returns. Pays a 6.9% dividend yield and has returned 19% over
12-months and averaged 9% annually over three years. Beta is 0.7.
Those are my ideas
based. As you’ve heard, past performance doesn’t predict the future.
Due your own due diligence. The more you know about your
investments, the better your results.