Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



These Dividends Have Strong Track Records

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some dividend payers to your portfolio, the PowerShares High Yield Equity Dividend Achievers Portfolio ETF (NYSEMKT: PEY  ) 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.

The ETF is based  on the Mergent Dividend Achievers index, which features  companies that have upped their payouts annually for at least 10 years.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is 0.60 %. Its yield was recently a solid 4%, too. The fund is fairly small, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF has a mixed performance  record, beating the S&P 500 over the past three years, but lagging it over the past five. 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.

Why dividends?
The power of dividend investing is often underappreciated. They can be powerful portfolio supporters, providing income even during market downturns. Consider parking them in an IRA, too, to postpone or avoid taxes on dividends.

More than a handful of dividend payers  had strong performances over the past year. Domestic tobacco giant Altria (NYSE: MO  ) surged 22% and yields about 5.3%. Its future may not be as bright as its past, though, due to a shrinking smoker base in the U.S., coupled with more folks moving to discount cigarettes and rising taxes and regulations. A steep payout ratio may keep its dividends from rising briskly.

New York State-based regional bank Arrow Financial (Nasdaq: AROW  ) gained 12%, despite facing challenges posed by persistently low interest rates. The stock yields 4.1%, and some worry about shrinking margins. The company has been executing some share buybacks in recent years.

Other companies didn't do as well last year, but could see their fortunes change in the coming years. Pitney Bowes (NYSE: PBI  ) , known for its postage-meter business, sank by 34% and recently yielded a whopping 13.9% as the stock trades near a 52-week low. The company has been struggling with electronic communications replacing many mailed communications. Its revenue has been shrinking, but thanks to cost cutting, its earnings haven't shrunk. It's involved in other less-threatened and higher-margin businesses as well, and has a new CEO hailing from IBM (NYSE: IBM  ) .

New England-based bank People's United Financial (Nasdaq: PBCT  ) , up just 4%, has been growing via acquisitions and has a solid commercial banking business, but it has several red flags, too, such as a steep tier-1 risk-adjusted capital ratio and a high net noninterest expense. It's also among the least-efficient regional banks, by its efficiency ratio. It yields about 5.2% these days and is aiming to buy back a lot of its stock.

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.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2155857, ~/Articles/ArticleHandler.aspx, 10/28/2016 8:49:21 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 11 hours ago Sponsored by:
DOW 18,169.68 -29.65 0.00%
S&P 500 2,133.04 -6.39 0.00%
NASD 5,215.97 -34.29 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/27/2016 4:00 PM
AROW $31.87 Up +0.25 +0.00%
Arrow Financial CAPS Rating: No stars
IBM $153.35 Up +1.54 +0.00%
IBM CAPS Rating: ****
MO $64.43 Down -0.09 +0.00%
Altria Group CAPS Rating: ****
PBCT $16.46 Up +0.22 +0.00%
People's United Fi… CAPS Rating: ****
PBI $17.37 Down -0.31 +0.00%
Pitney Bowes CAPS Rating: **
PEY $15.38 Down -0.12 +0.00%
PowerShares High Y… CAPS Rating: ***