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3 Income ETFs To Consider In The Current Low Interest Rate Environment

By Investing.com (Tezcan Gecgil/Investing.com )ETFsNov 19, 2021 03:18AM ET
www.investing.com/analysis/3-income-etfs-to-consider-in-the-current-low-interest-rate-environment-200608818
3 Income ETFs To Consider In The Current Low Interest Rate Environment
By Investing.com (Tezcan Gecgil/Investing.com )   |  Nov 19, 2021 03:18AM ET
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Investors seeking regular income generally include dividend stocks and high-yielding exchange-traded funds (ETFs) in their portfolios. According to Morgan Stanley, over the long-run, dividend shares typically outperform those that do not pay dividends.

Recent research highlights that investors “prefer the dividend payout, not only to stabilize portfolios and minimize risk, but also hedge against inflation or even accumulate a revenue stream.”

Given low interest rates, yield-generating ETFs are regularly in the limelight. Therefore, today we introduce three funds with relatively juicy yields that could appeal to a range of investors looking for dividends or aiming to enhance total return.

1. Invesco High Yield Equity Dividend Achievers ETF

  • Current Price: $20.53
  • 52-Week Range: $16.45 - $21.85
  • Dividend Yield: 3.8%
  • Expense Ratio: 0.53% per year

The Invesco High Yield Equity Dividend Achievers™ ETF (NASDAQ:PEY) invests in shares of 52 companies that show consistent dividend growth in addition to their current yields.

PEY Weekly Chart.
PEY Weekly Chart.

PEY, which first started trading in December 2004, tracks the NASDAQ US Dividend Achievers 50 Index. The leading 10 businesses comprise almost 30% of net assets of $979.8 million. Financials have the largest slice, with 23.50%. Next in line are utilities (23.13%), consumer staples (17.05%), energy (13.70%) and communication services (6.77%).

Mid-stream energy name ONEOK (NYSE:OKE); oil majors Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX); telecommunications heavyweight AT&T (NYSE:T); petroleum refiner Valero Energy (NYSE:VLO); utilities group Edison International (NYSE:EIX); and Northwest Bancshares (NASDAQ:NWBI) are among the leading names on the roster.

The ETF returned 24.1% year-to-date, seeing a record high in May. The funds forward price-to-earnings (P/E) and price-to-book (P/B) ratios are 12.73x and 1.66x, respectively so potential investors could consider buying the ETF around these levels.

2. SPDR S&P Global Dividend ETF

  • Current Price: $67.09
  • 52-Week Range: $56.72 - $71.61
  • Dividend Yield: 4.71%
  • Expense Ratio: 0.40% per year

The SPDR® S&P Global Dividend ETF (NYSE:WDIV) provides exposure to global firms with high dividend yields. Fund managers typically focus on those names that have been increasing dividends for at least 10 consecutive years.

WDIV Weekly Chart.
WDIV Weekly Chart.

WDIV, which has 95 holdings, tracks the returns of the S&P Global Dividend Aristocrats Index. The ETF started trading in May 2013. Canadian firms have the largest share (25.61%). Next come those from the U.S. (23.06%), Japan (11.86%), Hong Kong (8.03%) and the UK (7.90%).

The top 10 names make up about 18% of net assets of $333.4 million. In terms of sectors, we see financials (26.52 %), followed by utilities (18.19%) and real estate (13.07%) and consumer staples (10.54%).

Leading holdings include Exxon Mobil; Canadian Smart REIT (OTC:CWYUF) and mid-stream oil and gas operator operator Keyera Corp (TSX:KEY); leading Spanish energy group Enagas (OTC:ENGGY); and Japan Tobacco (OTC:JAPAY).

Since the start of the year, WDIV returned close to 11.5% and reached a multi-year high in June. P/E and P/B ratios are 12.50x and 1.25x, respectively. Interested readers would find value at these levels.

3. Invesco CEF Income Composite ETF

  • Current Price: $24.41
  • 52-Week Range: $20.92 - $24.72
  • Dividend Yield: 6.61%
  • Expense Ratio: 2.34% per year

The Invesco CEF Income Composite ETF (NYSE:PCEF) invests in other high-yielding funds. About a third of the funds in PCEF are those that generate income by selling options contracts. And more than a quarter of the ETF is in high-yield (or junk) bond funds.

PCEF Weekly Chart.
PCEF Weekly Chart.

PCEF, which has 125 holdings, began trading in February 2010. Net assets stand around $969.6 million, and the top 10 funds comprise about 24% of the ETF. Among the leading closed-end funds in PCEF are:

Eaton Vance Tax-Managed Global Diversified Equity Income Closed Fund (NYSE:EXG) – yield is 7.85% and it is up 20.0% YTD;

PIMCO Dynamic Credit Income Fund (NYSE:PCI) – yield is 9.87% and it is down 0.1% YTD;

Blackrock Enhanced Equity Dividend Trust (NYSE:BDJ) – yield is 5.93% and it is up 19.4% YTD;

Virtus Dividend Interest & Premium Strategy Fund (NYSE:NFJ) – yield is 5.65% and it is up 18.3% YTD.

PCEF returned 8.9% in 2021 and hit a multi-year high in September. We like the diversity of the fund and believe it deserves further research. However, we should highlight the high expense ratio.

3 Income ETFs To Consider In The Current Low Interest Rate Environment
 

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3 Income ETFs To Consider In The Current Low Interest Rate Environment

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Comments (4)
Mesgana Negusse
Mesgana Negusse Nov 19, 2021 9:15PM ET
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Wouldn't vanguard's global high yield dividend be economic?cost wise?
MARK LEWIS
MARK LEWIS Nov 19, 2021 12:37PM ET
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things to consider, thanks.
Otabil Osei Jerry
Otabil Osei Jerry Nov 19, 2021 12:16PM ET
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how can I invest
Mohd Izhar Muslim
Mohd Izhar Muslim Nov 19, 2021 3:19AM ET
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That sounds greatly.. I'm impressed.. Thanks for the article 💯
Nur Udashi
Nur Udashi Nov 19, 2021 3:19AM ET
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oh noh
 
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