High Yield ETFs

GandK · Post by **GandK** » Tue Mar 20, 2012 1:54 pm

I saw this article on SeekingAlpha and was intrigued:
http://seekingalpha.com/article/443201- ... vy-and-sdy
Thoughts?

JohnnyH · Post by **JohnnyH** » Tue Mar 20, 2012 2:29 pm

Very cool, especially the PBP buy/write SP500. However, everything there looks to have underperformed SPY over the last 3 months by much more than the increased dividends.
Still ETFs are getting more versatile daily. PBP might be a great thing to hold when the VIX starts going up again.

George the original one · Tue Mar 20, 2012 4:51 pm

Egad... ETFs yielding <4% are called "high yield"?!?! I'm sorry, but that doesn't fit my definition of high yield.
And they charge you an expense for that privilege?

GandK · Post by **GandK** » Tue Mar 20, 2012 6:11 pm

OK, George, I'll bite: what's your definition of high yield?

JohnnyH · Post by **JohnnyH** » Tue Mar 20, 2012 6:13 pm

The benefit to these is the diversification of an index... Some people, myself included, don't subscribe to fundamental analysis and don't like the risks associated with individual stocks.

George the original one · Tue Mar 20, 2012 8:04 pm

In general, I'd define high yield as over 5% and very high yield as over 8%...
For comparison, my non-leveraged portfolio yields 6%-7% and the yield has been only 25-50% of the total return in any particular year. My experimental leveraged portfolio yields 15%-18%, but the total return has been less.
Most every dividend growth investor will tell you that a 3% portfolio yield is easy to do on your own.

George the original one · Wed Mar 21, 2012 5:56 pm

Another reason why I say this is not high yield:
Drop the 10 lowest yielding stocks from the Dow 30 and the average yield is 3.36%. That's a slightly higher yield than the highest of the ETFs.
Or pick the dogs of the Dow (the 10 highest yielding) and you'll get an average yield of 3.96%.