Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you believe in the power of dividends to turbocharge your portfolio, the SPDR S&P Dividend ETF (NYSE: SDY) could save you a lot of trouble. Instead of trying to figure out which dividend-paying companies will perform best, you can use this ETF to invest in several dozen of them simultaneously. It holds roughly 60 companies from the S&P's High Yield Dividend Aristocrats index, companies that have hiked their dividends for at least 25 consecutive years.

The basics

ETFs often sport lower expense ratios than their mutual fund cousins. The SPDR S&P Dividend ETF's expense ratio -- its annual fee -- is a low 0.35%. Its dividend yield was recently 3.2%.

This ETF has performed reasonably, but it's also a bit young, with just five years on the books. Still, its five-year average beats the overall S&P 500 index. As with most investments, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver. With a somewhat low turnover rate of 44%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. Telecom concern CenturyLink (NYSE: CTL), up 22% over the past year and named as one of "10 Dividends to Trust," recently sported a dividend yield north of 7%, and has been growing its revenue briskly. Genuine Parts (NYSE: GPC), up 31% and yielding more than 3%, is a powerhouse in supplying auto, industrial, office, and electrical parts. Utility company Consolidated Edison (NYSE: ED), up 20%, sports a yield approaching 5%, though it hasn't been raising it very substantially.

Other companies didn't add much to the ETF's returns last year, but could have an effect in the years to come. Pitney Bowes (NYSE: PBI) did gain 10% over the past year, but that return underperformed the market. Yielding more than 5%, the company needs to find more promising revenue generators than postage meters; it's been inking deals to supply services for FedEx (NYSE: FDX) and UPS (NYSE: UPS) customers.

The big picture
A well-chosen ETF can grant you instant diversification across the investment categories that interest you.

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ETFs can help you find the way to better investing results. To find some great ETF investing ideas, take a look at The Motley Fool's special free report, " 3 ETFs Set to Soar During the Recovery ."

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Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. FedEx is a Motley Fool Stock Advisor recommendation, and the Fool owns shares of it and United Parcel Service. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is Fools writing for Fools.