More as well as more financial experts agree that we may live in the coming years, returns well below historical averages, which are similar to those experienced during the 70s (secular bear).
What to perform in such a context? While some advocate the approach of "market timing" to try to outsmart the markets, some more conservative schools of thought show interest on dividends paying stocks.
Why?
Dividends play an important role in long-term performance of a portfolio. This significance is such that since 1926 the performance of the S&P 500 comes to 43% of the dividends! In addition, during the 70s decade when the market was rather neutral, dividends have accounted meant for 73% of the total return of the S&P 500! That should make you think twice regarding investing in the next "hot sector "to make you rich.
The selection of good dividends plays is rather hard. Fortunately, some specialty ETF's carry out this job rather well. Here is a list of some of ETF's in the US as well as Canada that tracks equity high dividend yielders:
US ETF
iShares Dow Jones Select Dividend (ETF) DVY
SPDR S&P Dividend (ETF) SDY
PowerShares Dividend Achievers (ETF) PFM
Canada ETF
iShares Dow Jns Cnd Slct Dvdnd Indx Fnd (TSE) XDV
Claymore SP TSX Cdn Dividend ETF CDZ
These ETF's tracks stocks that meet specific criteria's such as: dividend per share growth, dividend payout percentage rate, minimum average daily volume as well as a minimum dividend yield.
If you like high dividends, choosing the right opportunity of stocks that will provide a good diversification might be a hard task. Not only will it offer a less diversified approach than ETF's but it might as well be terms of commissions. The easiest approach is just to invest in equity ETF's that tracks high dividends.
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