Displaying items by tag: dividends

(New York)

If you are of the opinion that rates are not going to move higher, or if just want some great yields and aren’t too worried about rates, take a look at mortgage REIT ETFs. Mortgage REITs are a special subsector of the REIT industry, and have recently become greatly more accessible because of ETFs. For instance, consider the iShares Mortgage Real Estate ETF (REM). The fund has a 30-day SEC yield of 9.36%. It is obviously rate sensitive, but even during last year’s brutal hiking cycle, it only lost 3.75%.

FINSUM: If the Fed stays put this year, which it likely will, these could be a great investment as we head into a downward rate cycle.

(New York)

With all the newfound reticence of the Fed, one important fact remains—they could hike at any time. The Fed was hawkish for a long time, and as dovish as they have suddenly become, a position shift on rates could be quick. Accordingly, when considering income-focused investments, advisors need to be very mindful about rate risk. One way to earn good income while also hedging against rates is to look at short term bond funds. Zero and short duration bond funds have little to no rate/duration risk, which means they can earn income without the threat of big losses coming from movements in rates and yields. Some funds to consider are the ProShares Interest rate hedge family or the Fidelity Limited Term Bond (FJRLX), the latter of which yields 2.89% and has a duration of 2.4 years.

FINSUM: Short-term yields have come up so much that limited term bond funds now look like a great buy for stable income without so much capital risk.

(New York)

Where is the best place to find inexpensive income? That is a great question for any portfolio. With that in mind, here is a list of seven funds that can help investors get solid yields via inexpensive ETFs: iShares Core High Dividend ETF (HDV), SPDR Portfolio S&P 500 High Dividend ETF (SPYD), Invesco Dow Jones Industrial Average Dividend ETF (DJD), Vanguard High Dividend Yield ETF (VYM), JPMorgan U.S. Dividend ETF (JDIV), Xtrackers MSCI EAFE High Dividend Yield Equity ETF (HDEF). All the funds have expense ratios of between 0.07% and 0.20% and average yields ranging up to around 4%.

FINSUM: These are very core funds with good awareness, but always nice to have them all in one place. We particularly like the Xtrackers internationally-focused income fund because it can help get income from differing rate environments.

(New York)

“Cheap dividend” is a welcome phrase for many advisors. Income investments are precious, especially as clients age, but inexpensive and good-performing dividend funds are not quite as easy to find as one might expect. With that in mind, here are few names to consider: the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD), the Oppenheimer S&P Ultra Dividend Revenue ETF (RDIV), and the Wisdom Tree US Quality Dividend Growth ETF (DGRW). The first two average just under 4% yields and have fees well under 40 bp. The Wisdomtree fund seeks dividend growth names, has lower yields, and costs 28 bp.

FINSUM: We are fans of the high dividend and low volatility approach, so quite like the Invesco fund here. LeggMason also has another good option with that theme, LVHD.

(New York)

Stable income is in the best place it has been for years. The yield curve has stabilized with rates at reasonable levels, which means finding decent-yielding investments isn’t nearly as hard as it was a few years ago. That said, income investments, especially at the higher-yielding end, have pitfalls. With that in mind, here are some good income ideas. The picks come from Franklin Templeton’s $73 bn Income Fund. Some of the top names held (holding assets across the capital structure) are Chesapeake Energy, Tenet Healthcare, JP Morgan Chase, Wells Fargo, Softbank Group, and Bank of America.

FINSUM: This is a very energy and financials heavy group, which has its risks.