Our first project is a simple ETF screener. We gathered a list of all ETFs traded in the US stock exchange. Thanks to MasterDATA who has provided a free CSV file containing the complete list. Then we use data from Yahoo Finance! to generate various customized screeners. One of them is generating ETF dividend yield.

  Click here to download table of ETF dividend yield (in CSV format)

Here is the 15 ETFs that pay highest dividend as of today.

Links

• Highest Paying Dividend ETFs in Canada
• Highest Paying Dividend ETFs in NYSE

We would like to compare a couple of closed-end funds that track S&P 500, i.e.:

• BlackRock Enhanced Capital and Income Fund (NYSE:CII)
• Eaton Vance Tax-Managed Buy-Write Income (NYSE:ETB)
• Nuveen Core Equity Alpha Fund (NYSE:JCE)

All those three funds are basically buying stocks in S&P 500. They tried to outperform S&P 500 by writing options (covered call). That’s why; if you look at their fact sheets, they pay very high dividend. BlackRock’s Enhanced Capital and Income Fund, for example, pays 12.64% dividend. Yes, it’s double-digit dividend.

Now, let’s compare the performance of those funds to SPY, which is the biggest ETF that replicates S&P 500. As you can see, none of those funds can beat SPY in the long run. From year 2007 until today, here are the return of those funds:

• CII: –25.05%
• ETB: –22.37%
• JCE: –39.67%
• SPY: –21.44%

Of course, if you choose the right funds, the overall return including dividend might be higher than SPY.

As always, we remind you to consult your financial advisor before making any decision. Some of Bryan’s recommendations are actually closed-end funds. Note that stocks with high dividend yield do not guarantee that they cannot go down in price. They may also cut their dividends at any time.

• BlackRock Global Opportunities Equity Trust (NYSE: BOE)
• Otelco, Inc. (NYSE: OTT)
• Nuveen Multi-currency Short-term Government Income Fund (NYSE:JGT)
• ING Risk Managed Natural Resources Fund (NYSE:IRR)
• Linn Energy, LLC (NYSE:LINE)
• SPDR Barclays Capital High Yield Bond ETF (NYSE:JNK)
• The Blackstone Group L.P. (NYSE:BX)
• Chimera Investment Corporation (NYSE:CIM)
• American Capital Agency Corp. (NYSE:AGNC)
• Navios Maritime Partners L.P. (NYSE:NMM)

Links

• Favourite High Income Recommendations
• Highest Paying Dividend ETFs in NYSE
• Highest Paying Dividend ETFs in Canada

As always, we remind you to consult your financial advisor before buying any of these ETFs. Also be aware of ETFs with very low volume. As you might know, many ETFs are now in the list of ETF Death Watch. We personally owns iShares High Yield Corporate Bond ETF only from this list.

Update (19-Feb-2010): As we mentioned in our previous posting, the data are coming from GlobeInvestor.com web site as of the date of this posting. There might be differences as the stock prices move up/down or because of dividend raise/cut.

If you are interested running this filter yourself; go to Globe Investor’s stock filter. Select Security type as “ETF”. When you get the result, click on “$ Change” or “% Change”; and you’ll get Dividend Yield column.

Are we recommending those ETFs? Some of them, yes. In fact, we currently own iShares S&P/TSX REIT ETF. Do your own research and consult your financial advisor before buying any of these ETFs.

We don’t recommend iShares S&P/TSX Income Trust ETF for now since there’ll be a new regulation regarding income trusts starting next year (2011). They’ll be taxed in the same way as corporation. So, we can expect the dividend yield might go down significantly.

The yield of BMO Emerging Markets ETF looks suspicious. Emerging markets don’t normally pay high dividends. When we checked BMO web site about this ETF, the fact sheet says the dividend yield for this ETF is only 1.70%. It looks like Globe Investor has the wrong data here.

We don’t recommend buying any long-term bonds right now, such as iShares Canadian Long Bond ETF. There have been rumours that Bank of Canada will hike interest rates soon.

Also note that iShares has just released a couple of new ETFs recently. There is no dividend distribution history for them yet. I believe a few of them, such as iShares US High Yield Bond, has the potential to be in the list above.

Update (19-Feb-2010): The data are coming from GlobeInvestor.com web site as of the date of this posting. There might be differences as the stock prices move up/down or because of dividend raise/cut.

• Aberdeen Asia-Pacific Income Fund, Inc. (NYSE:FAX)
• Annaly Capital Management, Inc. (NYSE:NLY)
• Western Asset Global Partners Income Fund Inc (NYSE:GDF)
• Alpine Total Dynamic Dividend Fund (NYSE:AOD)
• WisdomTree International Dividend Top 100 Fund (NYSE:DOO)
• Enerplus Resources Fund (NYSE:ERF)
• Enterprise Products Partner L.P. (NYSE:EPD)

All of these stocks/funds pay very high dividend, from as low as 6% to as high as 17%. Why high-paying dividend equities? Many analysts believe that we’ll be in a range-bound market for quite a while; some of them are even expecting double-dip recession. In this kind of situation, we can’t expect much from capital gain. That’s why; high-paying dividend equities are preferable.

Note that the recommendations above are from Mark Skousen. They are not from us although we agree that we need high-paying dividend equities in the current market. As always, we recommend you to consult your financial advisors before making any investment decision.

Links

• Stocks with more than 10% Dividend Yield