Income From Equity Dividend ETF

The yield on the 10-year Treasury bond currently stands at 2.68 percent, which is well off the lows of the year.

Historically speaking, the yield remains below the average and has a long way to go to get back to where many income investors would like to see it. As the baby boomers move into retirement mode, the search for regular income becomes a priority.

Unfortunately for many, the yields on bonds are not enough to generate the income need for the golden years.

Investors have turned to equity ETFs that offer a basket of stocks that produce above-average income to combat the low bond yields. The world of equity ETFs that focus on dividend stocks has been growing as demand from investors has increased.

One ETF in the group offers a yield well above that of the 10-year Treasury and gives investors the potential of capital gains via the stock market.

Global X SuperDividend ETF (SDIV) - The ETF tracks the performance of 100 equally weighted companies that rank among the highest dividend yielding equities in the world. The basket of stocks cover several continents with the U.S. the largest with an allocation of 27 percent. Australia makes up 19 percent, followed by the U.K. at 12 percent. The sector breakdown is also diverse with financials at 18 percent, utilities at 13 percent, and telecom at 12 percent.

In 2013, the ETF has lagged the major indices with a gain of only 5 percent, but a recent rally has pushed it close to a 4-month high. What makes the ETF attractive to income-seeking investors is the 30-day SEC yield of 6.5 percent, which is impressive.

Source:  Matthew McCall, Penn Financial Group

Global X SuperDividend (SDIV) is a component of the D2 Capital Management Multi-Asset Income Portfolio.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

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