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Dividend ETFs offers the perk of extra income to shareholders. When market confidence is low, dividend-based exchange traded funds (ETFs) tend to offer some relief because they guarantee investors dividends regularly.
Dividend ETFs perform differently since they track indexes from different providers and some may be concentrated in specific industries. The Star Ledger points out that financial stocks are a common holding in dividend funds, and they can be sensitive to interest rates and inflation.
One ETF provider that offers dividend-based ETFs is WisdomTree. Some other dividend-based ETFs, include:
- Powershares High Growth Rate Dividend Achievers Portfolio ETF (PHJ): The PowerShares High Growth Rate Dividend Achievers Portfolio Fund seeks to replicate the High Growth Rate Dividend Achievers Index, which is designed to identify the 100 Dividend Achiever companies with the highest 10 year annual dividend growth rate. These companies have increased their annual dividend for ten or more consecutive fiscal years. The portfolio is rebalanced quarterly and reconstituted annually.
- Vanguard Dividend Appreciation ETF (VIG): The Vanguard Dividend Appreciation ETF is an exchange-traded share class of Vanguard Dividend Appreciation Index Fund, which employs a "passive management" - or indexing - investment approach designed to track the performance of the Dividend Achievers Select Index. This index is a subset of the Broad Dividend Achievers Index and is administered exclusively for Vanguard by Mergent, Inc.
- WisdomTree LargeCap Dividend Fund (DLN): The WisdomTree LargeCap Dividend Fund seeks to provide investment results that closely correspond to the price and yield performance of the WisdomTree LargeCap Dividend Index.
- iShares Dow Jones Select Dividend Index Fund (DVY): The iShares Dow Jones Select Dividend Index Fund seeks to provide investment results generally equivalent to the Dow Jones U.S. Select Dividend Index.
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