When I was younger, I remember watching a show called The New Treasure Hunt. A contestant would pick from a group of 30 large prize boxes, and the host would clown around with gags the box had in it before revealing the prize. It might have been a donkey. It might have been ..."$25,000"!
Bond yields stink right now, and some think a bond bubble is on the horizon. Smart investors may want to go on their own treasure hunt, rebalancing their diversified portfolios by shifting capital from bonds into other income-producing securities, where they can reinvest the income for compounded growth.
Scoring great dividends
Dividend ETFs can be a great way to accomplish this, as they are traditionally cheaper than actively managed mutual funds. The simple route is to stick with the big players in the dividend ETF area: SPDR S&P Dividend
However, investors who are willing to dig a little deeper can find even better yields without necessarily increasing risk substantially. By favoring certain sectors over others and including global stocks as well as U.S. dividend payers, you can broaden your dividend exposure and earn some extra income as well.
I own four ETFs that pay great dividends. On the international side, iShares Dow Jones International Stock
WisdomTree Equity Income
iShares S&P Global Utilities
Finally, telecom stocks also have a reputation for safety and strong dividends. An easy way to get them is through the Telecom HOLDRs
Beating the bubble
If bonds worry you, you have many choices to boost your income. Diversified dividend ETFs are a cheap way to gain broad exposure with limited risk.
The advantage is that you can do this research, because the answers are not hidden inside pretty boxes with a game show host seeking to humiliate you when you win..."a sock puppet!"
Matthew Brown owns shares of iShares Dow Jones International Stock and S&P Global Utilities, as well as Telecom HOLDRs and WisdomTree Equity Income. He watches reruns of The New Treasure Hunt on YouTube. 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 has a disclosure policy.