Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to load up your portfolio with some solid dividend-paying stocks, the Wisdom Tree Total Dividend ETF (NYSE: DTD ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.
ETFs often sport lower expense ratios than their mutual fund cousins. The Wisdom Tree ETF's expense ratio -- its annual fee -- is a relatively low 0.28%. It recently yielded nearly 2.7%. The fund is fairly small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.
This ETF has roughly kept pace with the overall market, underperforming it by a smidge over the past five years and outperforming it a bit over the past three. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a low turnover rate of 15%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Plenty of dividend-paying companies had strong performances over the past year. Philip Morris International (NYSE: PM ) , for example, surged 37%. Recently yielding 3.8%, the globally focused tobacco giant enjoys faster growth rates and less restrictive regulations than its America-based cousin, Altria. It has been raising its dividend aggressively and growth rates in emerging nations bode well for the company, though regulatory restrictions are likely to increase abroad over time.
Southern Copper (Nasdaq: SCCO ) , up 21%, carries more debt than many of its peers, but it's investing heavily in capital projects, aiming to boost its production, and it may be able to generate a lot of revenue in copper-hungry China. The stock's dividend (recently 2.6%) has fluctuated along with its fortunes, and its payout ratio has often been rather steep.
ConocoPhillips (NYSE: COP ) gained 19% and recently yielded 4.5%. The company has been reshaping itself a bit lately, shedding some assets and looking into promising new arenas. For example, it has its eye on fracking opportunities in China, which have a lot of potential due to the size of reserves. But they also hold risks. Some analysts have downgraded the company, worrying about the sustainability of the dividend, among other things, while other analysts see it as undervalued.
Procter & Gamble (NYSE: PG ) advanced 11%, and recently yielded 3.3%. The consumer products powerhouse has been hurt by a strong dollar (since it gets much of its revenue abroad, in currencies that must then be converted to dollars) and weak spending in our sluggish economy. But the company has been introducing new products, cutting costs (in part via layoffs), and investing heavily in faster-growing emerging markets.
The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.