Tag Archives: stocks

High Income ETFs Worth Their High Costs

With negative interest rates dominating international headlines and the benchmark 10-year U.S. Treasury yields slipping to below 2%, there is huge demand for income ETFs. Yield-hungry investors have rushed to high-dividend securities and ETFs in search of steady current income. Global growth continues to flounder, and the Fed is in no mood to hike rates frequently this year, suggesting continued outperformance by dividend ETFs. That being said, we would like to note that current income turns futile if you end up paying high expenses for a high-dividend or high income ETF. After all, everybody wants value for money. Also, cheaper funds have the potential to outperform the pricey choices. Keeping capital gains or losses constant and considering an expense ratio of 1%, a fund of $10,000 invested at 8% annual dividend will grow to $19,672 in 10 years, while the same fund invested at an expense ratio of 0.1% will grow to a higher amount of $21,390. But there are a few high income ETFs that can be intriguing picks despite the high costs associated with them. These ETFs have given decent performances so far this year (as of April 15, 2016), overruling the heightened volatility in the market. Also, since these have offered solid yields, their high costs do not hurt investors. Below, we highlight a few of such high dividend ETFs that are worth their high expense ratios. YieldShares High Income ETF (NYSEARCA: YYY ) The fund seeks to provide the performance of the ISE High Income Index. This $81.5 million fund definitely has a high expense ratio of 1.82%, but yields a stupendous 10.71% annually. The fund holds 30 closed-end funds ranked the highest overall by the ISE on the basis of three criteria, namely fund yield, discount to net asset value and liquidity. Around 66% of the fund is targeted at debt securities, while the rest are in equities. The fund is up 2.5% so far this year (as of April 15, 2016). Though the capital gains here are not solid, a 10.71% yield makes up for feeble market performance. AdvisorShares Athena High Dividend ETF (NYSEARCA: DIVI ) This $7.4 million actively managed ETF offers dividend yield of about 4.05% and has an expense ratio of 1.30%. The fund is heavy on North America (55%), followed by emerging Asia (16%) and developing Asia (6%). None of the stocks accounts for more than 4.36% of the portfolio. The fund is up 10.7% so far this year (as of April 15, 2016) – a sturdy performance which makes its dividend-adjusted return sturdier. Guggenheim S&P Global Dividend Opportunities Index ETF (NYSEARCA: LVL ) This ETF follows the S&P Global Dividend Opportunities Index, which focuses on high-yielding securities worldwide. As many as 109 securities are chosen from around the world for inclusion, with heavy exposure going toward finance (26.36%), utilities (22.21%), telecom (16.3%) and energy (12.88%) securities. Australian, American and British stocks account for about 20.6%, 17.1% and 15%, respectively, of total assets. This $52 million fund charges 65 bps in fees. It yields 6.06% annually (as of April 15, 2016) and is up 8.3% so far this year (as of April 15, 2016). First Trust Dow Jones Global Select Dividend Index ETF (NYSEARCA: FGD ) This $352 million fund provides exposure to the 100 high-yielding stocks. None of the securities accounts for more than 1.73% of the assets. From a sector look, financials takes the top spot at 34.33%, while energy, telecom, industrials, consumer discretionary and utilities round off the next five spots with double-digit exposure each. About half of the portfolio is tilted toward large- cap stocks, while mid caps and small caps take the remainder. In terms of country profile, Australia, U.S., Canada and United Kingdom occupy the top four positions. The fund yields 5.16% annually, while its expense ratio comes in at 0.58%. Agreed, an expense ratio of 0.58% is not too steep, but it is way higher than many high dividend ETFs like Vanguard High Dividend Yield ETF (NYSEARCA: VYM ), which charge just 10 bps in fees. The fund is up 5.3% so far this year (as of April 15, 2016). SPDR Income Allocation ETF (NYSEARCA: INKM ) INKM is an actively managed fund of funds that seeks to provide total return by focusing on investment in income and yield-generating assets. The ETF primarily invests in SPDR ETFs, but also includes other exchange-traded products. Investment-grade bonds (31.5%) and equity (27.6%) occupy the top two spots in the portfolio. The expense ratio is 70 basis points, while it yields about 4.13% annually. The fund is up 3.3% so far this year (as of April 15, 2016). Original Post

Citrix Grows EPS, Sales Faster Than Modeled After Reorganization

Apparently not too distracted by its reorganization, the highest-rated issue in IBD’s Computer Software-Specialty Enterprise industry group,  Citrix Systems ( CTXS ) boosted its Q1 earnings faster than analysts had expected. Reporting after the market close, the maker of cloud management software said Q1 adjusted earnings rose 81% to $1.18 per share, where Wall Street expected 92 cents. Revenue rose 8.5% to $826 million, while analysts polled by Thomson Reuters had modeled $789 million. Citrix stock was up nearly 7% in after-hours trading, following the company’s Q1 earnings release. Shares closed up a fraction, at 80.56, in the stock market today , just 4% off a four-year high of 84.17, hit on Oct. 28. “I am very pleased with our performance this quarter on both the top line and bottom line,” Citrix CEO Kirill Tatarinov said in the company’s earnings release. “The progress we made in refocusing the company — simplifying our portfolio and sharpening our message — is starting to pay off. “We are seeing a strong improvement in our operating margin, and our focused strategy has made it easier for our field teams and channel partners to execute; consequently, we saw improvement in the top line. It gives us a measure of confidence that we are on the right path, and it gives us opportunities to solidify our leadership position in our core areas.” Q1 marks Citrix’s fourth consecutive quarter of double-digit earnings growth following three quarters of 2%-to-7% growth. Profits have outperformed sales, up by only single-digit percentages, now for seven straight quarters. Last week, Robert W. Baird analyst Steven Ashley reiterated an outperform rating with an 85 price target on Citrix stock. He said Baird had surveyed 96 Citrix channel partners and got back mixed results, “consistent with management’s guidance that factored in normal (Q1) seasonality and allowed for possible disruptions from reorganizational activity.” “We continue to believe prospects for improved channel performance are underappreciated,” Ashley said. The company’s reorganization included the layoff of about 1,000 employees and contractors in December and January, the pending spinoff of Citrix’s GoTo lines and a $200 million annual reduction in other operating expenses. In February, Kevin Parker, former CEO of Deltek, was named chairman of the GoTo spinoff, expected to be completed late this year. The third-largest in IBD’s Computer Software-Specialty Enterprise industry group, Citrix boasts a $12.45 billion market cap, half the size of the largest, VMware ( VMW ), but barely smaller than CA ( CA ). However, VMware carries an IBD Composite Rating of 47, compared with CA’s 54 and Citrix’s 92, meaning Citrix is outperforming  92% of all S&P 500 stocks based on earnings, sales, institutional ownership and other fundamental metrics.