5 Top Performing Dividend ETFs

Many investors are paying a lot of attention to dividend-focused equity ETFs this year, and with good reason. As yields across the fixed-income universe remain compressed globally, stocks are the asset class meeting investors’ demand for yield.

Nick Colas, head of research at Convergex in New York, put it best in a research note Monday, July 18:

“With the S&P 500 trading at 18x, the science of historical trading patterns clearly says U.S. stocks are fully valued. Stocks have one thing in their favor at any price: dividend yields cannot go negative, unlike the payout on bonds. How appealing is that feature? It all depends on how long you think global interest rates will remain under pressure. More scientific catalysts – the S&P 500 earnings more than $120/share, for example – seem far away indeed. Bottom line: stocks are the new bonds. For now.”

So what are the ETFs in this segment delivering the highest total returns—comprising both price appreciation and dividend yield?

Here are the top five, and they are not the largest, most well-established ETFs in this category listed in the U.S. They are all rather smaller, more narrowly focused funds. (The list excludes leverage/inverse strategies):

• The Guggenheim Canadian Energy Income ETF (ENY | C-77), with total returns of 26.8% YTD

This is the best-performing dividend-focused ETF so far this year, excluding leverage and inverse strategies, and it’s not even a U.S. equity fund. ENY focuses on Canadian energy names. It tracks an index that’s a multifactor-weighted composite of Canadian royalty trusts and Canadian oil sands companies.

The fund tilts toward oil and gas companies focused on exploration, production and services at the expense of refining and marketing names. Since it came to market in 2007, it has gathered only $30 million in total assets, and has an expense ratio of 0.71%.

The 31-security portfolio has a 12-month distribution yield of 3.22%, and a 30-day yield of 2.82%, according to Guggenheim data. 

• The Guggenheim S&P High Income Infrastructure ETF (GHII | F-36), with total returns of 25.7% YTD

GHII tracks an index of roughly 50 high-yielding, infrastructure-themed global stocks. The fund not only owns high-dividend-paying stocks, it also weights securities by yield, delivering some of the highest yields in the segment.

From a sector perspective, the fund allocates to three sectors—energy, utilities and industrials. And it delivers strong yields. According to Guggenheim data, GHII’s 12-month yield sits at 4.87%, and its most recent 30-day yield hit 5.37%.

But GHII, with an expense ratio of 0.45%, is still extremely small—less than $3 million in total assets after being on the market for about a year. 

• The WisdomTree Commodity Country Equity Fund (CCXE | D-44), with total returns of 22% YTD 

CCXE invests in dividend-paying international stocks from commodities-exporting countries. The fund allocates equally to eight commodity producers: Australia, Brazil, Canada, Chile, New Zealand, Norway, Russia and South Africa.

The performance may be impressive, but CCXE has failed to find much investor interest. Since it came to market nearly 10 years ago, it has amassed less than $8 million in total assets—something that keeps this fund among those facing high closure risk. The fund has an expense ratio of 0.58%

From a sector perspective, financials lead the mix with a 24% allocation, followed by energy at about 20%.

CCXE has a distribution yield of 5.05%, and a 30-day yield of 3.26%, according to WisdomTree data. 

• The PowerShares High Yield Equity Dividend Achievers Portfolio (PEY | B-66) with total returns of 21.8% YTD

PEY is a high-yield play that tracks a yield-weighted index of U.S. companies that have increased their annual dividends for at least 10-consecutive years. The core idea here is sustainability—it only invests in stocks that have proven to have sustainable dividend yields.

The fund has been around since 2004, is nearing $1 billion in total assets and has an expense ratio of 0.54%—by far the cheapest of these five ETFs. Utilities and energy are PEY’s biggest sector allocations, at about 21% each.

PEY has a 12-month dividend of 3.13%, and in the most recent 30-day period, it delivered 3.25% in yield, according to PowerShares data. 

• The SPDR S&P 500 High Dividend ETF (SPYD), with total returns of 21.6% YTD

 SPYD is an equal-weighted portfolio of the 80 highest-yielding stocks selected from the S&P 500. The fund is a pretty straight-forward high-yield play. It doesn’t screen for quality or for sustainability of dividends. SPYD simply picks the highest-yielding stocks in the S&P 500.

The fund came to market less than a year ago, has only $35 million in assets under management and carries an expense ratio of 0.12%. Utilities are its largest sector tilt, at about 30% of the portfolio.

SPYD has delivered 3.86% in yield in the most recent 30 days. The fund’s 12-month dividend yield sits at 2.71%, according to State Street data. 

Charts courtesy of StockCharts.com

Contact Cinthia Murphy at [email protected].