Michael

I'm planning to get back in the the market in the next week or two. I'll probably be purchasing Diamonds (DIA) or Spiders (SPY) and investing only about 1/3 of my total investment at that time so I'll be dollar cost averaging. I'm choosing Diamonds or Spiders because of the high dividend yield, relative safety, low fund cost, and good diversity.

I have a question about the Diamonds dividend yield.

Since the beginning of October, I have been following the Diamonds dividend yield and it has fluctuated between about 3.80%-4.80% depending on price of price of the dow that day (if the dow was down, the yield was up and visa versa). On Friday, the yield indicated about 4.50% but this weekend the yield is down to 2.10%. Thursday and Friday were the dividend declaration and ex-dividend dates. I expected that the yield would pull back, maybe to as low as 3.00% at the current price, over the next year due to the economy but pulling back all the way to 2.10% has surprised me.

Has the dow components announced large dividend reductions? Prior to this weekend, the Diamonds showed an annual payout of $4.01 and now is showing a payout of $1.87. I'm confused.

Currently Spiders (SPY) are paying more than Diamonds at about 3.00%. This usually is not the case.

Anybody have any ideas about what may have happened?

http://www.dividendinvestor.com/term...mondstrust.php

Ray

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Michael

I figured out why the dividend yield appeared incorrect for the Diamonds ETF. The Diamond ETF pay dividends monthly and apparently the annual amount of dividends for reporting purposes is calculated by multiplying the last months dividend by 12 instead of adding up the dividends for the past 12 months. Using the last month as the base for the Diamonds ETF is very inaccurate since that month may only get dividends from one company or from companies that pay small dividends.

If I add up the dividends for the past 12 months, the Diamonds ETF pays an annual dividend of $3.02 or a yield of 3.45% at todays price.

http://finance.yahoo.com/q/hp?s=DIA&...=20&f=2008&g=v

It appears that the Spider ETF (SPY) and the Power Shares QQQQ ETF (QQQQ) report dividends quartly but they calculate the dividends by adding all 4 quarters together so they should be pretty accurate. Ii doesn't appear that the calculation for the dividends for Diamonds was a mistake since the last 2 months were calculated that way (last month $0.334*12=$4.01 & this month $0.156*12=$1.87).