It's also worth noting that the proposed hike on dividend tax rates wouldn't be unprecedented. In fact, it was the norm until the Bush tax cuts went into effect in 2002 (those in the top tax bracket paid a top tax rate of 35% of dividends).
There are about four dozen ETFs that focus on dividend-paying companies, including some that value consistency of dividends and others that zero in on the most attractive dividend yields. A few of the more popular dividend ETFs that could be impacted by any changes to tax policy include:
Vanguard Dividend Appreciation ETF (VIG): This ETF focuses on companies that have steadily increased their dividend; the portfolio includes companies that have recorded dividend increases for at least ten consecutive years, including stocks like McDonald's, IBM, and Coca-Cola.
iShares Dow Jones Select Dividend Index Fund (DVY): This ETF is linked to an index that consists of about 100 high-yielding stocks; the underlying benchmark screens potential components by dividend growth rate, dividend payout percentage, and average daily trading volume.
SPDR S&P Dividend ETF (SDY): This ETF is linked to the S&P High Yield Dividend Aristocrats Index, a benchmark that includes companies that have increased dividends for at least 25 consecutive years. Pitney Bowes ant Cincinnati Financial Corp., and AT&T are among the largest individual allocations in this ETF.
Vanguard High Yield Dividend ETF (VYM): This ETF includes the non-REIT stocks with the highest dividend yields; currently, top components include Exxon, Microsoft, and Chevron.
iShares High Dividend Equity Fund (HDV): This ETF is linked to the Morningstar Dividend Yield Focus Index, a benchmark that screens potential components by superior company quality and financial health.
Disclosure: No positions at time of writing.
Michael Johnston is a a senior analyst at ETFdb. ETFdb offers a comprehensive and orignal 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.