ETF NEWS 02/22/2006
Dividend investors are an impatient sort, always seeking out ways to get more out of their money. Fortunately, the quest for high-paying investments has not gone unnoticed by one ETF provider: PowerShares.
PowerShares’ ETFs are not like conventional ETFs, in that they are not directly tied to an index such as the S&P 500, Nasdaq 100, etc., but they aren’t constructed at the whim of a portfolio manager either. PowerShares’ ETF offerings are still objectively managed, but they are based on what the company calls its intelligent indexes, or "Intellidexes" of specific market segments.
According to PowerShares, their ETFs are "based on Dynamic Indexes that use rules-based quantitative analysis. This Intellidex methodology chooses stocks for their capital appreciation potential, evaluating and selecting stocks based on multiple valuation criteria." What this translates to is a selection of the most attractive stocks in a particular market segment, and not just the stocks that happen to comprise a given industry. It’s kind of a "best of the best" representation of specific areas of the market.
A few months ago PowerShares rolled out several new dividend-based ETFs to go along with their one existing dividend offering, the PowerShares High Yield Dividend Achievers (PEY), introduced back in December of 2004.
The first new offering is the PowerShares Dividend Achievers (PFM). The salient feature of PFM is that it only includes companies that have increased their annual dividend for ten or more consecutive fiscal years.
The second new PowerShares ETF I is the High Growth Rate Dividend Achievers (PHJ). PHJ concentrates on the 100 companies with the highest 10-year annual dividend growth rates.
In my view, the most interesting of the new PowerShares funds is the International Dividend Achievers (PID). This fund is made up of international stocks and American Depository Receipts (ADRs) that have increased their annual dividend for five or more consecutive fiscal years.
If you are a dividend investor in search of better returns, check out these three new PowerShares offerings.
Jim Woods is a 30-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.
His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. Read more about Jim Woods.
