5 ETFs That Focus on Dividends

Yield-hungry investors have a full menu of choices among exchange-traded funds that invest in dividend payers.

Yield-hungry investors have a full menu of choices among exchange-traded funds that invest in dividend payers. But just as an abundance of tempting entrees at a smorgasbord can leave you paralyzed with indecision, too many investment options can also be a bad thing.

Narrow your choices by looking for funds that offer more than just a fat yield. After all, the stocks with the highest yields tend to be associated with the shakiest companies -- the ones that may be ill-equipped to sustain payouts in a downturn. And a disproportionate chunk of the market's top yielders tend to reside in the financial sector, which was the epicenter of the 2007-09 stock-market conflagration. Because ETFs track indexes rather than rely on active managers to pick securities, it's important to choose a dividend ETF that has some safeguards against loading up on the riskiest companies.

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Elizabeth Leary
Contributing Editor, Kiplinger's Personal Finance
Elizabeth Leary (née Ody) first joined Kiplinger in 2006 as a reporter, and has held various positions on staff and as a contributor in the years since. Her writing has also appeared in Barron's, BloombergBusinessweek, The Washington Post and other outlets.