It’s getting more and more difficult to find the best income stocks. Stocks that pay high dividends go in and out of style as the share price often fluctuates to such a degree as to negate the dividend paying advantages. One easy way around this dilemma is to invest in professionally managed dividend paying portfolios. These portfolios are structured as ETF’s and trade on the stock exchange.  Make no mistake, these ETF’s can and do lose money at times.  However, the diversification safety makes up for the down periods. 

 Here are three dividend paying ETF’s you need to know:

1. SPDR S&P Dividend ETF (NYSE:SDY)

This dividend paying dynamo tracks the S&P 500 High Yield Dividend Aristocrat Index. What a great name, but does the index live up to its highfaluting name? Well, it’s made up of 60 companies from the S&P 500 that have increased their dividends yearly for a minimum of 25 years. The majority of the underlying companies are large cap firms that still trade at realistic prices.  The ETF yields a little less than 4%, not a bad return for a fairly stable investment, but it doesn’t quite live up to the name.  It boosts a 5.00% return for the year and 19% plus over the last 3 years.

2. Guggenheim Multi Asset Income ETF (NYSE:CVY)

I love this one for its massive diversification. This ETF tracks 120 underlying instruments including common and preferred stocks, REIT’s, master limited partnerships, ADR’s and closed end funds. However, 38% of the ETF is made up of utilities and financials.  It has a year to date return of 1.86% and a five year average return of 13.43%. If you don’t mind being over weighted in utilities and financials, this may be the right dividend ETF for you.  

3. iShares S&P U.S. Preferred Stock Index Fund (NYSE:PFF)

This ETF,as its name suggests, tracks 220 preferred stocks from 44 U.S. companies.  It’s not diversified across sectors as approximately 90% of the holdings are in financial company’s preferred stock. Your opinion of the financial sector would be the deciding factor on whether to invest in this dividend yielding ETF. It is also important to note that preferred stocks generally tend to behave more like bonds than common stocks in relation to interest rates. With rates at rock bottom levels, this is a consideration before investing in PFF.  However, with this said, PFF has the best performance and yield of the 3 listed dividend paying ETF’s with a yield of 6.01% and a 11.65% gain so far on the year.

 Action to Take: Conduct some research into dividend paying ETF’s and choose the one that best fits your investment goals.