3 ETFs Paying 14% That Are Safe…For Now

Posted by D4L | Saturday, July 05, 2014 | | 0 comments »

High-yield ETFs that have mega-high yields are very tempting. Anything offering a dividend yield above 10% always gives me pause, because there’s got to be a reason that the payout is so high. In cases like BDCs or mREITs, it’s because they are leveraging really low interest rates to lend out or sell securities at higher yields. In other cases, the stocks have been beaten down to the point that the yield has risen to a level that may be unsustainable.

I decided to go on a hunt for the highest high-yield ETFs I could find, because ETFs would offer some safety in their inherent diversification. If a few stocks in the ETF imploded, the entire ETF may not go down with them. I found three ETFs that offer diversification but also carry their own risks. After careful evaluation, I feel these dividend yields are safe for the foreseeable future. Any danger of implosion is likely to be telegraphed: UBS E-TRACS 2x Wells Fargo Business Development Company ETN (BDCL), iShares Mortgage Real Estate Capped ETF (REM) and iShares MSCI Colombia Capped ETF (ICOL).

Source: InvestorPlace

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