Top stock Picks: Bond & fixed income ETF’s

By: ispeculatornew
Date posted: 03.29.2010 (5:00 am) | Write a Comment  (1 Comment)

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Last Thursday, I wrote a post about the highest ETF dividends (measured by dividend yield). I was expecting to see many of the higher yields come from bond ETF’s. Why? Because usually bond funds are seen as fixed income ETF’s and generally investors that are buying wish to receive steady income flows. Diversification is certainly a reason to buy bonds but so is getting a steady flow of income.

It came as a bit of a surprise to see that in fact many of the Top Dividend ETF’s were not fixed income. So I decided to take a closer look at bond ETF’s (and deeper look than what I did 3 weeks ago) to see what type of dividend yield they are offering and how well they have been doing in the past year.  So what I did is find all of the bond/fixed income ETF’s that are active on US markets (let me know if I missed one). They are ranked by market cap in the table below.

Here are some of my conclusions:

-While there are many new bond ETF’s, I’m surprised to hear how little variety of corporate bond ETF exists. There are many many type of government and municipal bond, by duration, protected against inflation and more. But not that much variety in corporate bonds.

-While there are a few international bond ETF’s, there is little variety once again. I would expect this to change in the coming months.

A few bond ETF’s do not offer dividends. This might actually be a tendency for some as ETF’s can convert income gains from the bond into capital gains through the structure of the actual ETF. This makes it easier for investors to postpone paying taxes among other things. It really depends on each individual investors but when holding it for several years, this can make a difference.

TickerNamePricePE RatioPE Next YearSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
MSFTMicrosoft Corp41.2815.4813.9411.543.6711.181.0110.466.91-0.94
ADBEAdobe Systems Inc71.11138.1421.582.263.813.620.918.338.17N/A

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1 Comment

  1. […] that is quickly changing with the arrival of many fixed income ETF’s . These ETF’s have much lower fees and are more tax efficient than similar mutual funds and […]

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