High-yield exchange traded funds
I always look first to Vanguard when I look for exchange traded funds. One of my favorites is the Vanguard High Dividend Yield ETF (NYSEMKT:VYM). This fund has an exceptionally low expense ratio of only 0.10, while offering a great yield of 3.12%. When you take a look at its top ten holdings, you will see a great mix of high-quality companies, such as Wells Fargo, ExxonMobil, Johnson & Johnson, and General Electric. These companies all offer investors broad exposure to the market while being known for their long history of increasing dividends. I believe we will see increased inflows into these stocks as retail investors begin to come back to the market. As the value of this fund rises, I remain confident the pace of increasing dividends will keep this yield supported at 3%.
Invest in Vices
Sinful companies have long been popular for yield-driven investors, as these companies tend to have high dividend payouts. I am a big fan of companies in the gambling, alcohol, and tobacco sectors as the business models tend to be very consistent and strong through all types of economic conditions. I would like to highlight Altria Group Inc (NYSE:MO), one of my favorite sinful stocks and one of the top-rated stocks here in The Motley Fool community. Altria Group Inc (NYSE:MO) is a top player in the American tobacco industry with brands like Marlboro, Skoal, and Parliament, to name a few. The company has diversified itself across the entire industry and is now becoming a dominant player in the growing smokeless tobacco industry. The company currently pays investors a dividend yield close to 5%. Going forward, I fully expected Altria Group Inc (NYSE:MO) to maintain its long history of returning money to shareholders.
Conclusion
Consider other options before locking up your money in the low-paying Treasuries market. Preferred shares offer investors great yields while providing some exposure to the underlying company. High-yield dividend funds such as the Vanguard High Dividend Yield ETF provide investors a cost-efficient vehicle to hold high-quality companies.
The article Searching for Yield in a Low Rate Environment originally appeared on Fool.com and is written by Nathaniel Matherson.
Nathaniel Matherson has a position in Altria Group and Vanguard High Dividend Yield ETF. The Motley Fool has no position in any of the stocks mentioned. Nathaniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
