New ETF Targets High Dividend Stocks

The SPDR Dividend ETF (SDY.A: Quote, Profile, Research) tracks the Standard & Poor's High Yield Dividend Aristocrats Index, which includes 50 high- yielding companies in the S&P Composite of 1,500 stocks that meet certain criteria and have increased their dividends every year for at least 25 years.

Howard Silverblatt, market equity analyst for S&P, said at a briefing at the Amex that dividends have been regaining favor with investors since late in 2002, after a long period in which they were out of fashion.

"Basically, companies were penalized for returning cash to their owners," he said. But the bear market of 2000-2002 brought a change in the way companies and investors viewed dividends, he said.

The components must have a minimum market capitalization of $500 million and must trade an average of 1.5 million shares or more per year.

Concentration limits prevent any stock from being more than 4 percent of the index weight at the time of a quarterly re-balancing. Those issues with the highest yield get the biggest weight in the index.

Most recently, the yield on the portfolio was about 3.4 percent.

"There are other dividend products out there that are very heavily weighted toward utilities and financial," said Jim Ross, co-head of the SSgA Advisor Strategies Group.

The SPDR Dividend ETF is currently about 26 percent in financial stocks, and utilities and financials together make up less than 50 percent.




Stock Market News and Investment Information | Reuters.com

Beware The Faults in Homebuilding ETF

PowerShares recently came out with an ETF aimed at the red hot housing sector. It's the Building and Construction Portfolio trading under the symbol PKB. At first it seemed like a great way to trade a basket of homebuilders, but as you will see upon examination, it's much broader than homebuilding stocks.

Here is a good indepth article that talks about the broad makeup of the portfolio.


Beware Faults in Homebuilding ETF

SMH Rallied & So Did The Nasdaq

After getting to the middle of the range at 32.50 the Semiconductors staged a sharp rally that brought the SMH back over $35. The semiconductors haven't been leading the nasdaq's moves higher this year, but have been providing downward pressure. The fact that they had a sharp snap back rally, allowed the nasdaq to rally back toward it's highs.

Notice, the QQQQ (Nasdaq 100) has actually rallied to new highs for the year which means Large Cap Tech is leading the market. Another area of leadership has been the Dow Jones Transportation Index, which is surprising considering the high energy prices. If you are a believer in Dow Theory, a break out in the Dow Jones Industrials this fall would be very bullish!

The Dow Jones Utilities just completed the most incredible 3 year rally that looked more like a tech or biotech rally. But they have cooled off in recent weeks as the bond market moved lower.