By Carolyn Pairitz
Known for historically high-dividend yields, investors looking for higher current income have always turned to utilities. And as the global market continues to grow, utilities companies are now starting to look towards foreign markets for new opportunities. With an expanded consumer base, these utilities stocks have become some of the highest dividend payers in the industry, as new sources of revenue keep flowing in. Below we feature the five highest yielding utilities ETFs for income hungry investors [see also 3 (Unexpected) High Yielding ETF Opportunities].
1. Brazil Infrastructure Index Fund (BRXX)
Tracking an index of 30 leading companies deemed to be representative of Brazil's infrastructure sectors, this fund is made up of mostly medium and large-cap companies that have brought Brazil into the 21st century. While half of the portfolio is made up of utilities and industrials equities, BRXX also offers exposure to the basic materials, real estate, and energy sectors, all key drivers of growth in emerging markets. Over its two years in operation, this ETF has consistently paid out 4.65% annually in dividends, and with a positive YTD return, it does not look like this trend will falter anytime soon.
2. SPDR S&P International Utilities Sector ETF (IPU)
Passing by many high dividend yielding U.S. companies, this ETF focuses on dividend paying stocks from developed markets outside of the U.S. Securities from the United Kingdom account for almost a quarter of the portfolio, while significant allocations are also given to stocks from Germany, Japan, France, and Hong Kong. The majority of IPU's holdings are large and giant cap utility firms; there are, however, some energy and industrial firms represented, though they only make up 5% of the portfolio. Although the fund boasts an 30-day SEC yield of 4.55%, its heavy tilt towards the Eurozone may not be ideal for investors with lower risk tolerances.
3. S&P Global Utilities Sector Index Fund (JXI)
This half domestic, half international ETF also focuses on developed markets around the world. But unlike IPU, JXI does include US utilities companies. JXI's portfolio is primarily made up of European equities, leaving minimal allocations to securities from Latin America and Developed Asia. The fund mostly holds large and giant-cap firms, which tend to be more stable than their small-cap counterparts. JXI currently maintains a 3.82% SEC yield and a 4.05% YTD return, making it an appealing option for investors looking to add global equities exposure to their portfolios.
4. S&P Global Infrastructure (IGF)
IGF's underlying index is designed to measure the performance of the global infrastructure sector, a unique but often risky segment of the market. In regards to sector allocations, the fund's portfolio is almost evenly split between the utilities, industrials, and energy sectors. U.S. equities account for just under a third of IGF's total assets. The remainder of the portfolio is nicely distributed across stocks from several countries around the globe, including Canada, the U.K., Germany, and Australia. However, only 10% of IGF's total assets are allocated to emerging markets. IGF's SEC 30 day yield of 3.58% combined with its 10.07% YTD return, makes it an appealing option for investors looking for higher current income.
5. Global ex-U.S. Utility Fund (DBU)
Tracking a fundamentally-weighted index, DBU looks beyond the US to include the largest 100 global utility firms from both emerging and developed markets. While there are some minor allocations in industrials and energy securities, which combined make up almost 10% of total assets, DBU is primarily dominated by utility companies. In regards to the portfolio's market capitalization breakdown, every market cap size is represented in this fund, though large and medium-cap stocks receive the highest weightings. DBU offers exposure to over 26 different countries, and no more than 10% of the fund's total assets is allotted to securities from a single country. While this fund has not been performing as well as the others on this list, its current SEC 30-day yield of 4.76% should interest some current income seekers.
ETFdb offers a comprehensive and original ETF database and analytical consulting services for advisors and investors, as well as a free newsletter. Learn more about their services by visiting ETFdb.com. Disclosure: the author had no positions in the securities named in this article at the time of writing.