Realize Why Dividends Are Important

More as well as more financial experts agree that we may live in the coming years, returns well below historical averages, which are similar to those experienced during the 70s (secular bear).

What to carry out in such a context? While some advocate the approach of "market timing" to try to outsmart the markets, some more conservative schools of thought show interest on dividends paying stocks.

Why?

Dividends play an important role in long-term performance of a portfolio. This value is such that since 1926 the performance of the S&P 500 comes to 43% of the dividends! In addition, during the 70s decade when the market was rather neutral, dividends have accounted meant for 73% of the total return of the S&P 500! That should make you think twice regarding investing in the next "hot sector "to make you rich.

The option of good dividends plays is rather difficult. Fortunately, some specialty ETF's carry out this job rather well. Here is a list of some of ETF's in the US also Canada that tracks equity high dividend yielders:

US ETF

iShares Dow Jones Select Dividend (ETF) DVY

SPDR S&P Dividend (ETF) SDY

PowerShares Dividend Achievers (ETF) PFM

Canada ETF

iShares Dow Jns Cnd Slct Dvdnd Indx Fnd (TSE) XDV

Claymore SP TSX Cdn Dividend ETF CDZ

These ETF's tracks stocks that meet specific criteria's such as: dividend per share growth, dividend payout percentage rate, minimum average daily volume as well as a minimum dividend yield.

If you like high dividends, choosing the appropriate opportunity of stocks that will provide a good diversification might be a difficult task. Not only will it offer a less diversified approach than ETF's but it might as well be terms of commissions. The easiest approach is just to invest in equity ETF's that tracks high dividends.

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