iShares’ 5 Best Dividend ETFs
By: Ned Piplovic,
As the availability of exchange-traded funds (ETFs) increases, income investors have a larger selection from which to choose and always seek the best dividend ETFs for their individual investing strategy.
While some investors look across the entire selection of available ETFs, others will develop a preference for a specific family of ETFs offered by a particular brokerage or investment provider and choose only from those funds. While that strategy might seem to limit investment choices, most providers have dozens and even hundreds of ETFs, which provide sufficient access to a variety of investment opportunities.
For instance, BlackRock, Inc. (NYSE:BLK) currently offers nearly 350 individual ETF options through its iShares™-branded family of funds. The list below includes the five best dividend etfs in terms of yield and total return over the past 12 months.
iShare’s 5 Best Dividend ETFs #5:
iShares MSCI Global Energy Producers ETF (NYSE:FILL)
Based on the MSCI ACWI Select Energy Producers Investable Market Index, this fund seeks investments in companies primarily engaged in the business of energy exploration and production. Within the energy sector, the fund focuses primarily on companies that engage in the exploration and production of oil and gas, as well as the production and mining of coal.
As of January 4, 2021, the fund had nearly $52 million in assets distributed over 162 individual holdings. While the fund invests in companies engaged in exploration of multiple energy sources, oil & natural gas companies dominate the bulk share of total holdings and assets. The top 10 companies, which account for more than 55% of net assets, are all in the oil & natural gas exploration and production business. Furthermore, just the top five companies by share of the fund’s total net assets – Exxon Mobil Corporation (NYSE:XOM), 12.14%, Royal Dutch Shell plc (LSE:RSDA & RDSB). 4.26%, Chevron Corporation, (NYSE:CVX), 11.26%, BP plc (NYSE:BP), 4.94%, and Total SA (NYSE:TOT), 7.08% – combine for nearly 40% of total assets.
From a geographical diversification aspect, nearly half of the fund’s assets – roughly 40% – remain invested in U.S. companies. An additional 14% is in the United Kingdom and 7% in France. Aside from these three countries, which account for more than 60% of assets, the fund’s remaining assets are spread across several additional countries around the world. The fund’s current annual distributions yield is 3.9%
iShare’s 5 Best Dividend ETFs #4:
iShares Global Energy ETF (NYSE:IXC)
Like the previous fund on this list, this fund tracks an energy sector index – S&P Global 1200 Energy Sector Index™ – but has significantly higher net assets of just under $1 billion spread across 59 total holdings. Nearly half of this fund’s assets – 49% – are invested in U.S. companies, with an additional 14% invested in U.K. companies and nearly 13% in Canadian companies.
The top five holdings – Exxon Mobil Corporation (NYSE:XOM), Royal Dutch Shell plc (LSE:RSDA & RDSB), Chevron Corporation (NYSE:CVX), Total SA (NYSE:TOT) and BP plc (NYSE:BP) – account for nearly 42% of the fund’s assets. However, in addition to the oil and natural gas producing companies, this fund also holds assets in energy storage, transportation refining, marketing, equipment and supporting services. The fund’s current distribution yields 4.8%.
iShare’s 5 Best Dividend ETFs #3:
iShares Core High Dividend ETF (NYSE:HDV)
Based on the Morningstar Dividend Yield Focus Index, this fund seeks investments in companies that generally pay higher-than-average dividends. As of January 4, 2021, the iShares Core High Dividend ETF had nearly $6 billion in assets distributed over 75 individual holdings.
The Energy (19%), Consumer Staples (15%) and Health Care (21%) sectors dominate the fund’s share of total assets and combine for a total of 55%. The top five individual holdings – Exxon Mobil (NYSE:EXOM), 9.1%, Verizon Communications, Inc., 6.37%, Johnson & Johnson (NYSE:JNJ), 7.02%, Chevron Corporation (NYSE:CVX), 5.96% and AT&T Inc (NYSE:T), 8.7% – account for more than 37% of total assets.
While the fund’s unit price encounters occasional volatility, the long-term average growth trend is quite steady. The fund’s current 4.3% yield is excellent, and when combined with share-price appreciation, HDV nearly broke even over the past 12 months. The total returns over the past three and five years were significantly higher at 7.5% and 41.5%, respectively.
iShare’s 5 Best Dividend ETFs #2:
iShares MSCI Qatar ETF (NASDAQ:QAT)
For investors looking to invest in one of the economies in the Middle East, this ETF tracks the performance of the MSCI All Qatar Capped Index. Since Qatar is a small market, this ETF has just under $100 million in total assets invested in only 31 individual holdings. The top two holdings account for nearly 30% of total assets, and the top holding – Qatar National Bank (QSE:QNBK) – accounts for nearly quarter of the total assets by itself. Predictably, half of the fund’s assets are invested in financial institutions. Including the Industrial sector, with 14% of the fund’s assets, and Energy, with 9% of the assets, the top three sectors have more than 73% of the total assets among them.
The fund’s distributions for 2020 yielded 5.2% and stacked on top of equity growth, it brought more than 12% in total returns to shareholders in the trailing 12 months. The fund has performed exceptionally better over the last 3 years, with unadjusted returns of 27.9%.
iShare’s 5 Best Dividend ETFs #1:
iShares Commodities Select Strategy ETF (NASDAQ:COMT)
This ETF focuses on offering investors broad exposure to commodity investments through futures and commodity producer’s stocks. It invests in a combination of exchange-traded futures, options and contracts and tracks no individual index. As of January 4, 2021 the fund’s 90 individual holdings totaled nearly $216 million in total assets. Cash accounts for the vast majority of the fund’s assets, making up 93.4% of the portfolio.
The fund’s current annual distributions yield 1.4%.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.