4 ETFs Yielding More Than Double 10-Year Treasuries

Published on Wednesday, 06 June 2012 19:54 Written by Todd Shriber

It’s common knowledge that years of easy money, dollar-crushing monetary policy by the U.S. Federal Reserve has led to artificially low interest rates in this country. These days, 10-year Treasuries, which are no longer backed by an AAA-rated government, yield an anemic 1.65%. That’s hardly worth getting out of bed in the morning for.

That may sound distressing, especially for conservative investors or those looking to do some retirement planning, but there are scores of ETFs that now offer dividend yields that double or well beyond double what 10-year Treasuries. The even better news is that many of these funds fall on the more conservative end of the spectrum so investors will not be incurring unnecessary risk. Here are a few to consider:

Market Vectors High-Yield Muni ETF (NYSE: HYD):

Municipal bonds have stirred up their fair share of controversy over the past 12-18 months, but the controversy has been largely unfounded, as even the most fiscally fragile states have seen a lower number of municipal defaults. In fact, less than 1% of all muni bond issues ever default, so while HYD’s name implies it’s a risky ETF, it’s actually quite conservative. HYD yields over 5% and pays a monthly dividend.

Market Vectors Junior Gold Miners ETF (NYSE: GDXJ):

The Market Vectors Junior Gold Miners ETF is the riskiest fund on this list, but after the decimation gold miners have endured, this ETF is also yield well above 5%. Don’t expect that to yield to last for long because gold miners and their corresponding ETFs, GDXJ in particular, have been on fire recently.  This isn’t the type of ETF normally prized for its yield, so just consider the yield icing on the cake of what should be lucrative capital appreciation in the coming months.

iShares Dow Jones International Select Dividend Index Fund (NYSE: IDV):

IDV’s trailing 12-month dividend yield is nearly triple that of what you’ll find with 10-year Treasuries. The ETF is somewhat conservative in its sector allocations as utilities, consumer staples and telecom names combine for over 36% of the fund’s weight, but there is one major issue to consider here and that is what "international" means with IDV. It means a sizable concentration to Europe and that’s problematic for the moment.

Utilities Select Sector SPDR (NYSE: XLU):

Nobody does defense better than utilities stocks and ETFs and since defensive, low beta plays are in style in a big way right now, it’s reasonable expect XLU’s yield will come down a bit as more investors throw cash at this fund. For now though, XLU, which closed at a new 52-week high Wednesday, still yields better than double what 10-year Treasuries do.