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The Top 10 Dividend-Paying ETFs

In just 10 years, the number of exchange-traded funds, or ETFs, has soared over 10fold. In 2003, there were 199 actively managed ETFs. According to Bloomberg, today there are over 1,500 ETFs. Many investors are looking to exchange-traded funds these days as an alternative to owning individual stocks and mutual funds. That's because ETFs: Average lower maintenance fees than mutual funds. Can be bought and sold at any time of the trading day just like common stocks. Cover a wide array of investment areas including equities, bonds, currencies, commodities and real estate. Can provide less risk than owning individual stocks. Are typically more tax efficient than mutual funds in the sense that they have a lower capital gains tax. And that's not all... Many investors don't realize ETFs can also provide some of the highest-paying dividends in the stock market. High-Dividend-Yielding ETFs There's no doubt the past few years have been very straining financially for retirees and income seeking investors. The Fed's rock-bottom interest rates, coupled with the fact that most Treasury bond returns are in the negative when taking inflation into account, make it really hard for investors to find solace for their wealth. But that's where dividend-paying ETFs can help. And you may be surprised at just how many of these funds are dishing out big payments. Among the top 10 yielding funds are:

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Rank

ETF Name

ETF Symbol

Yield

UBS E-TRACS Mthly Pay 2x Mortg REIT ETN

MORL

22.35%

Global X Junior Mines ETF

JUNR

20.24%

iShares MSCI Singapore Small Cap Fund

EWSS

20.16%

db X-trackers MSCI Brazil Hedged Eq ETF

DBBR

15.42%

iShares Mortgage Real Estate Capped ETF

REM

15.40%

UBS E-TRACS 2x Wells Fargo Bus Dv Cm ETN

BDCL

14.38%

iShares MSCI Hong Kong Small Cap

EWHS

13.27%

db X-trackers MSCI EAFE Hedged Eq ETF

DBEF

12.10%

YieldShares High Income ETF

YYY

11.77%

10

Market Vectors Mortgage REIT ETF

MORT

11.67%

For income seeking individuals, many of these dividend-paying ETFs are getting harder and harder to pass up. In fact, by the end of 2012, CNBC noted that, "$1.3 trillion was now under ETF management, a 25% increase in one year." And WisdomTree states, ETFs are comprised of "baskets of investments that represent a diversified group of companies (just like mutual funds)." This means they're usually less vulnerable to price swings in the market than individual stocks. What's more, the recent push into ETFs has prompted many funds to drop their expense fees, which makes them even more appealing.

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Before you jump into an ETF just because it has a high yield though, there are risks to consider... Potential Risks The ETF industry has now become over a $1-trillion business and its growing fast. Yet as Forbes cautioned recently, "The top 143 ETFs represent more than 85% of the assets invested in ETFs. The bottom 700 ETFs make up just 2% of ETF assets. Because these ETFs haven't attracted sufficient assets and aren't widely traded, they often lack liquidity." In other words, despite the diversification many ETFs provide, many whether dividend paying or not are subject to wild price swings simply because there aren't enough people trading them. Plus, as Legg Mason's Peter Vanderlee told Barron's, "If you only look at the dividend yield, you're asking for trouble. Investors need to analyze the prospects for meaningful dividendgrowth," as well. The bottom line... You should shop around first to find an ETF that's right for you. ETFs Are Here to Stay Julie Casserly, President of JMC Wealth Management, recently told CNBC, "In the ETF world you can be in any sector at any point. You can now invest more like institutions. Prior to this big explosion, retail investors couldn't invest this way." This is a telltale sign that ETFs will only become more and more prevalent in the future. And when weighing the pros and cons, ETFs should be seriously considered for any investor's portfolio, especially those with high yielding dividends. Good Investing, Mike Kapsch P.S. On Monday, Investment U experts release a new investment opportunity to subscribers of IUs premium service. And they'll release another one on Tuesday... another on Wednesday... and so on. Past recommendations have seen gains of 225%, 415.19%, and even 733.33%. To make sure you receive their next play, go here now.

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hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Any investment contains risk. Please see our disclaimer.

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