ETFs for Dividend Hunters

So you want to invest in some dividend-paying stocks. Good for you! Dividends have played an important part in making many investors rich. The relatively reliable income stream they provide offers a great benefit, and of course, those dividends often come in conjunction with some good stock-price appreciation.

To find the best dividend payers in which to invest, you have a few options. You can always check out (free for the first 30 days!) our Motley Fool Income Investor newsletter service, which has more than 30 recommendations with dividend yields topping 5% and is outperforming the S&P 500 by some 7 percentage points. But you can also look at exchange-traded funds that focus on dividends.

The blogger at The Sun's Financial Diary did that by examining a bunch of dividend-focused ETFs and then seeing which companies are most frequently included. Here are the top seven companies the blogger found, along with their recent yields:

• Altria Group (NYSE:MO): 4.7%
• Bank of America (NYSE:BAC): 4.4%
• Pfizer (NYSE:PFE): 3.8%
• Verizon Communications (NYSE:VZ): 3.8%
• Citigroup (NYSE:C): 3.8%
• AT&T: 3.4%
• Chevron: 2.6%

You can do a search like this on your own -- just set your criteria to include high dividends and any other factors you might favor. Remember, though, that screening can prevent you from finding some great companies that may just miss one of your criteria but are otherwise exactly what you're looking for.

Another option is simply to invest in one or more mutual funds or ETFs that focus on dividends and let them do the rest of the work for you. Two ETF possibilities worth looking into are the iShares Dow Jones Select Dividend Index (NYSE:DVY) and the First Trust Value Line Dividend Index (AMEX:FVD), both ETFs. 

I encourage you to learn much more about ETFs in our ETF Center. It features info on how ETFs stack up against mutual funds, how to develop an investment strategy with ETFs, how to avoid pitfalls, and how to stay away from ETF impostors.

These articles may also be of interest:

• Going Beyond the Index
• The Surprising S&P 500
• The Changing Face of ETFs
• Delving Into Dividend ETFs

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. Pfizer is a Motley Fool Inside Value recommendation. Bank of America is a Motley Fool Income Investor recommendation.  Try any one of our investing services free for 30 days. The Motley Fool is Fools writing for Fools.