Exchange Traded Funds For Dividend Paying US Stocks

A growing number of investors are seeking to maximize their investment income rather than capital gains.

There're many reasons for this: the tech stock bust of 2001, the accounting scandals, the recent stock market collapse following the subprime mortgage scandal, and the desire of aging baby boomers to focus on increasing their current income rather than increasing future capital gains that are proving highly volatile.

Such investors can buy individual stocks that pay dividends, but unless they have a lot of money to invest they cannot benefit from the safety net of broad diversification. People who buy index mutual funds or exchange traded funds get diversification, but low dividend income. The S&P 500 index contains many companies that pay dividends, but also many that don't.

Fortunately, small income investors seeking convenience and diversification can choose from a number of exchange traded funds (ETFs).

The first ETF to focus solely on U.S. stocks that pay dividends is iShares Dow Jones Select Dividend Index Fund: DVY. It is based on the Dow Jones selection of the best U.S. stocks that pay dividends.

The PowerShares Dividend Achievers Portfolio: PFM tracks the Mergent Broad Dividend Achievers Index. This is a list of all U.S. companies that have raised their dividends every year for at least the last ten years. (Some have raised their dividends every year for over one hundred years.) Therefore PFM consists of all U.S. companies with a strong track record of raising dividends.

The PowerShares High Yield Equity Dividend Achievers Portfolio: PEY holds the fifty companies on the Mergent Dividend Achievers index now paying the highest dividends.

First True Value Line Dividend Index Fund: FVD holds the stocks in the Value Line Dividend Index. This index consists of companies that Value Line gives a SafetyTM Ranking of #1 or #2 using the Value Line SafetyTM Ranking System, which pay higher than average dividends and which have a market of at least $1 billion.

SPDR Dividend ETF: SDY tracks the S&P High Yield Dividend Aristocrat Index. The Dividend Aristocrat Index consists of the top fifty companies in the S&P Composite 1500 which have had annual dividend increases for at least the past twenty-five years.

The WisdomTree Total Dividend Fund: DTD consists of all the dividend paying companies in the U.S. stock market.

The WisdomTree High Yielding Equity Fund DHS tracks the WisdomTree High Yielding Equity Index. These are the companies in the WisdomTree Dividend Equity Index with the highest dividend yields.

The WisdomTree Dividend ex-Financial Fund DTN tracks the performance of the WisdomTree Dividend Top 100 Index excluding financial companies.

This ETF used to track all the top 100 dividend paying stocks. Obviously, WisdomTree restructured the fund after the financial crisis in the fall of 2008.

PEY, DHS and SDY focus on the dividend stocks with the highest yields. PFM and FVD focus on the companies with the longest track records of increasing dividends. DTN and DVY focus on quality of the companies. DTD is the broadest, including all U.S. stocks that pay dividends.

Investors seeking dividend income have a lot of good choices. They can receive an immediate return on investment whether the market goes up, down or sideways.

If you're depending on "growth" stocks to grow, your portfolio could remain dead for another 11 years! Profit from the secrets of investors who make money during both bull and bear markets. Send today for free report on income investing secrets. Learn more about my income investing blog right now.

How to Pick Dividend Stocks Amongst Penny Stocks Carefully For Maximum Profits and Without Loss

Stocks of those companies that offer dividends regularly is one of the several important factors that you need to take into account when deciding to pick stocks for investment and trading purpose.

For those who might not be aware of, dividends are portions of that profits earned by the company in a financial year and which the management of that public company, declares and distributes to all their shareholders in proportion to the number of shares they each hold.

The dividend so declared is usually a percentage of the actual face value of the share and not on the value at which you made your purchases, be it at a premium or current market rate at which they were actually bought for.

In terms of revenue earned by the shareholder the dividend offered may not appear temptingly high in terms of actual percentage of the value at which you may have perhaps brought them for from the market i.e. at the price quoted on the stock exchange where the company is officially listed for trading.

Nevertheless those companies that offer dividends speaks volume about their financial health, which is an important factor that you must look deeper into, to decide if its worth investing in such a company or not.

Now, don't you jump to conclusion too soon as soon as a company declares dividend to all its shareholders. There are several other factors that needs to be examined carefully to judge if the company is actually in a position to pay the same at all.

Its very important to find out whether or not the said company has enough financial stability and funds in its reserve to sustain payment of dividends to all its shareholders. Also one needs to know whether or not the option for reinvesting the profits earned for overall future growth and prosperity of the company than distributing the same as dividends.

Its not obligatory for a company to offer dividends each year to its shareholders, but there are times when the revenue earned crosses the company expectations for that year and the surplus profit so earned is distributed to the shareholders in gratitude for their sustained support.

It so happens that as soon as the management of a company declares at a shareholders meeting to distribute dividends at a pre-decided percentage, there is often a sudden surge in the value of the stocks of that company. Dividends are one important way to generate shareholders confidence in that company and thereby boost demand for its shares which in turn raises the price of the share so quoted.

Its here that I want to warn you. Just because the management of a company had declared dividend and by reflex action traders rush in to corner those shares with the hope that there would be further escalation in its value.

This is particularly true for penny stocks, where the management decides to announce the voting for the distribution of dividend through press release, but in reality they never try to file it officially with NASDAQ for failing to get a positive vote in response. This happens because in most cases 51% of the shares for that company is held by the management itself. So as traders rush to buy many of the shares hoping to convert it to a yes response the prices appreciate for the share, but the effort turns out to be in vain as more likely than not they lose to the management at the time of actual voting.

As a result the management is not under any obligation to pay the dividends so announced since it never filed the same officially, on the contrary it gets free publicity and investors on impulse rush to buy the shares hoping to cash on future demand when the value climbs several times over.

This is a perfect example of the illegal pump and dump schemes when prices of the penny stocks climb because of an announcement for distributing dividends and when the price reaches a predetermined value, the management and brokers dump the shares to book profit, without keeping up to its promise to pay dividend.

Lets suppose the management does keep up to its words by actually going through the tedious process of distributing dividends to all those stockholders who actually hold the shares of that company on or before the ex-dividend date fixed by the stock exchange after the company files for distributing of dividends so announced. However if you sell the stock or purchase on the ex date you as an investor cannot receive any dividend on the stock.

Now as an investor as I have already mentioned earlier in the article you have to test the financial strength of the company to find out if it at all can survive in the market after distribution of dividends.

That is why you have to be very cautious when a penny stock company announces distribution of dividend.

Since its very difficult to find amongst thousands of penny stocks which one of them would really do well and multiply its value in coming days you would require a software that would ease much of your burden to monitor the current hot penny stock picks and put it on your watch list to observe its trading pattern.

There is one such software developed by a college dropout mathematical genius that can actually help you to analyse various penny stocks and guide you in which of these penny stocks would you actually stake your money to build a profitable portfolio that would provide you with maximum gains with least possible risk, even when the markets are far too volatile for you to keep course.

If you wish to learn more on how to pick the best dividend stocks and hot penny stocks then Click Here Now. Article Source: http://EzineArticles.com/?expert=Somik_Ranjan_Roy

How to Invest in Best Dividend Stocks and Pick Penny Stocks For Maximizing Returns

How to invest in best dividend stocks and pick penny stocks for maximizing returns applying stock market technical analysis?

Best Dividend Stocks:

Traditionally some of the best stocks available in the market are the ones that offer dividend. And the best dividend stocks belong to those companies that has regularly paid dividend to all its shareholders for many years at a stretch without break. Such forms of stock are the safest for long term investments. These are known to appreciate steadily in value over the years. Historically such dividend paying stocks offer better return and carries minimum risk, than the so called growth funds.

No wonder stocks that offer regular dividends consistently are by and large stable and mature than those that don't and whose price patterns fluctuate too frequently. Such volatile shares, however potential, are difficult to read because of their erratic behaviour and is beyond the comprehension of novice who enter the stock market. In such situations one has to depend upon so called "expert" brokers and fund managers for advice provided they are reputed with a long standing.

Shares that offer dividends consistently are less prone to be volatile even when the markets are turbulent. These are the ones which are most lucrative amongst conservative investors who has very little appetite to stake their hard earned money. Although the value of such shares do not rise and fall heavily like most growth funds, their value continues to rise surely and steadily even when the markets are sluggish or choppy. In the long run, after several years such dividend paying shares outclass all other forms of investment in the share market sowed in the initial stage at the same time.

If the investor had wisely reinvested the dividends too on a regular basis, then at the end of say ten or twenty years, the amount earned after selling those shares at current market rates would fetch a considerable sum. No wonder such dividend paying stocks have remained the safest and best bet amongst investors with long term objectives.

However such stocks especially of Blue chip companies come at a price, unless you had wisely brought them when the markets were down such as during recession. Also you must have enough funds at the time of initial investment to be able to spread your investment in thick over a large diversified dividend paying stocks of reputed companies from various potential sectors, be it energy,infrastructure,finance, defense, food, security, FMCG (short for fast moving commercial goods) etc.

Moreover you must be ready to forget about the fund once you invested them, as it continues to lay golden eggs consistently and at no point of time you intend to withdraw the principle amount during the lock in period along with the dividends earned and reinvested. So for every dollar invested for shares nearly forty years ago it would fetch you $400 at current market rates. That means to earn million dollars for the same lot of shares one today had to invest $2500 in the best of diversified dividend stocks available way back in the early 1970's. That's quite a considerable sum to retire with.

Penny Stocks for Investment:

There are however people who have very little funds to invest and yet wants to dip their toes in the stock market. For them what could be a better option than to invest in penny stocks to begin with. If you are young and able, perhaps in your early twenties or thirties, with a steady source of income, and willing to invest $500 or even less in diversified portfolio of penny stocks, then perhaps you may take a calculated risk to earn more from penny stock investments. If you are willing to learn the ropes and follow the trend with the help of specially programmed stock analysis software you too can end up earning $20000 within a year.

I must warn you that investing in penny stocks although tempting is highly risky and cannot be compared with reputed dividend stocks. Although highly risky the penny stocks can actually offer very high returns in a very short duration say in a day or two but one has to remain alert to make the most of it and by minimizing loss that's most likely. Its easy to learn but by having control over ones greed factor, lest you overestimate and stall.

Penny stocks trade at less than $5 a share over the counter (OTC) and because of their low price are not controlled and examined as the other stocks of listed companies in NASDAQ or NYSE. These are listed on the OTCBB and you need the service of specialists for reliable information and guidance on companies offering penny stocks for trading. However for the common man its sometimes a difficult proposition because of several constraints that at times prove to be challenging and frustrating too.

Stock Analysis Software developed by an MIT mastermind dropout that fetched him millions from penny stock:

But with the help of special software its actually possible in the comfort of ones home or office to identify which amongst the stocks are performing well and those that have great potential using the stock market technical analysis.

Quite recently a young mathematics genius who dropped out from MIT has developed such a software. He has come up with an algorithm to build a unique stock analysis software that fetched him one million dollars in a single year by investing only $1000 in penny stocks in just 38 trades,that too without leveraging. The same application helps to pick the best dividend stocks too. The application takes into several factors for statistical and mathematical computation including human psychology for stock analysis and research to tell which amongst the stocks have great demand and potential.

He has since been offering personal help and advice regarding investment in all sorts of best dividend stocks and pick penny stocks to thousands through his highly informative newsletters for free as well as to paid members. Learn more on hot penny stock trading.

How to Choose the Best Dividend Stocks and Other Forms of Investment For Future Retirement Plans

What makes long term investment in diversified portfolio of dividend stocks lucrative for retirement plans?

Time and again dividend funds have proved their mettle with their excellent performance and have even outperformed Standard and Poor index funds or S&P 500. In fact it has been observed they continue to remain stable even when the markets are far too turbulent and unpredictable for non-dividend stocks. Investing in dividend funds are the best way to beat the inflation over the years. That is how one can preserve the real value of the amount invested initially that over and above works harder to offer better returns with the passing of each year, provided of course the dividends have been reinvested without break.

As a matter of fact dividend stocks are a far better option than government bonds that has very little option to keep inflation at bay. Even during the onset of recession as many as 300 of the 500 companies listed in S&P500 raised their dividend pay outs. Even during the heights of recession of 2009 particularly in coveted economic sectors such as health care, energy, telecommunications etc the dividends have actually appreciated.

Characteristics of Best Dividend Stocks

Invest in those companies that you can understand best i.e. leave out those companies that have interest in a vast spectrum of products and projects that makes them far too cumbersome for comprehension. Rather pick those companies that concentrates on one or two similar products, such as Gillette that makes razors and toothbrush. Also make sure the products in which the company deals in has a steady demand that is not affected by recession such as health, food, tobacco and alcohol.

See that the company has sufficient cash flow each quarter, lest it has to borrow from its own reserve to dole out dividends which could possibly prove far too disastrous, as this will not be able to sustain growth and development of the company. Make sure the company is not in debts and it does not have to raise capital from the market too frequently to sustain.

Also do not go for those companies that offer a dividend payout ratio that exceeds 80% in fact its best to go for those that offer 50% dividend payout ratio ( calculated by dividing annual dividends by annual net income). Too much would be a drain on the company revenue that needs to be reinvested for further growth and development.

Invest in ETFs or Mutual Funds for Dividend Stocks

The recent unpredictable market has however taken its toll on many dividend paying company stocks. Because of the adversity in the market the management of many of the listed companies have been forced to drastically slice off or totally stop paying dividends to their shareholders at all. As part of your strategies to invest in high yield dividend paying stocks its best to invest through a mutual fund or Exchange Traded Funds or ETFs. Its prudent that you include in your portfolio at least one mutual fund or ETF that includes dividend paying stocks of those companies belonging to emerging economies such as from countries that belong to the BRIC group, since the dividend yields are even better than those in the US in some cases. The BRIC economy is an acronym for Brazil, Russia, India, China. According to Goldman Sachs the combined economies of those of BRIC would surpass the economic might of the current developed and rich countries of the world. As of now only Mexico and South Korea economy can match that of the BRIC countries.

List of Dividend ETFs for long term investment for high future returns

I have compiled few of the dividend ETFs that might draw your attention and interest for investment. However caveat I must keep you informed that I am in no way trying to endorse them as I do not have a stake in them if you at all invest. I totally leave it to your discretion to pick dividend stocks ETF that best suits your intuition, analysis and many more factors before homing on one of them for future investments particularly if you wish to retire with plenty of funds in your coffers. Well here are they for your perusal:

First Trust Dividend ETFs that includes Dow Jones Global Select Dividend Index Fund (FGD) and Dow Jones STOXX European Select Dividend Index Fund (FDD) .

iShares Dividend ETFs that includes Dow Jones International Select Dividend Index Fund (IDV) and Dow Jones Select Dividend Index Fund (DVY)

PowerShares Dividend ETFs that includes International Dividend Achievers Portfolio (PID) and High Yield Equity Dividend Achievers Portfolio (PEY) .

Claymore Dividend ETFs that includes Claymore/Zacks International Multi-Asset Income ETF (HGI) and Claymore/Zacks Dividend Rotation ETF (IRO)

Well there are plenty of similar ETFs dealing in dividend stocks both international and those in the US. I can only hope that you carefully weigh all your priorities and make a SWOT analysis (i.e Strength, Weakness, Opportunity and Threat Analysis) of all your investment opportunities before taking the big step to fortune.

Stock Analysis Software and Newsletters developed by a College Dropout Mathematics Genius that has helped him to convert $1000 to $1 Million in just 13 months

Well in case you have an appetite to take risk or have surplus funds other than those that you invest in best dividend stocks, then may be you can stake $500 to invest and trade in short term investment such as in hot penny stocks. A mathematics genius has recently developed a software that can help you to trade like a seasoned professional trader to build your own fortune from home.

This guy has successfully traded in penny stocks to make his first millions in a years time by having just invested $1000 initially. Ever since he has been sharing his modus operandi with others who subscribe to his newsletters for valuable advice and penny stock alerts. His software has been developed on the basis of several factors including human psychology, mathematical computation and permutation, statistics, technical analysis etc. Anyone who either subscribes to his paid or free newsletters can actually follow each of his moves as he literally trades live and you watch him do so across the shoulder. Well why not give a try for free and find out if it at all suits you.

Remember trading penny stocks are highly volatile and hence too risky to trade, but then flying aeroplane or driving a car is too. Once you learn and practice you too will find trading in penny stocks fun and easy. So go ahead and build your fortune carefully and never be too over confident with either your intellect or intuition, that would be too disastrous. Always keep abreast of the happenings around and not bury your head in the sand like the ostrich when a storm approaches.Investment is not risky it is the investors who are a risk themselves. Always have control and approach all your problems step by step by learning from the masters of the trade.

To learn more on investment in Best Dividend Stocks and subscribe to investment newsletters Click Here Now. Article Source: http://EzineArticles.com/?expert=Somik_Ranjan_Roy