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How to benefit from the JSE's best dividend payers in one step

by , 03 April 2014

If you're looking to build up a portfolio of the Johannesburg Stock Exchange's best dividend payers without all the hassle of picking and investing in the shares individually, here's one way you can do it. You could invest in an exchange traded fund which does this for you. Let's take a closer look at how this works…

What is an ETF?

Exchange traded funds (ETFs) are index funds listed on the stock exchange, the team of experts at The South African Investor explain. They trade on the stock exchange just like normal shares. The idea behind ETFs is to allow you to mirror the performance of an index.

ETFs are like unit trusts but have some differences. Unlike a unit trust, you can buy and sell them when the market is open at their current trading price.

ETFs can also work out as a cheaper alternative to investing in unit trusts if you consider all the costs involved.

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The JSE has one dividend-focused ETF

So if you’re looking for an ETF that concentrates on dividends, currently you only have one option on the JSE. That’s the Satrix Divi Plus.

This ETF aims to mirror the performance of the JSE Dividend Plus Index. It tries to do this by investing in the 30 best dividend paying shares listed in the top 40 large-caps and the 60 biggest mid-caps.

It pays dividends to owners of the ETF every quarter, after deducting costs.

Here’s a chart showing the performance of the Satrix Divi Plus over the past five years…

Chart of Satrix Divi Plus

Currently the Satrix Divi Plus invests in the following sectors:
  • 45.43% in financials;
  • 14.35% in customer services;
  • 13.91% in industrials;
  • 9.72% in consumer goods;
  • 8.1% in telecoms;
  • 5.98% in basic materials; and
  • 2.5% in oil and gas.
You can view more about the Satrix Divi Plus and the shares the ETF invests in here.

So there you have it, how to benefit from the JSE’s best dividend payers in one step.

How to benefit from the JSE's best dividend payers in one step
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