The global economic slowdown has certainly affected how investors choose to allocate their assets, as many sectors of the market have been struggling to stay afloat in this uncertain economic environment.And with interest rates in many developed markets remaining at or near historic lows, interest in alternative sources of current return has spiked in recent years.That movement has taken yield-hungry investors in a number of different directions, with many embracing dividend-paying equities as a way to enhance their portfolio's yield without taking on excessive risk . There are over 50 ETFs offering exposure to dividend-focused strategies, including international and domestic products as well as sector-focused funds. But, of course, each of these ETFs employ different strategies, which will ultimately have an impact on yield, volatility and bottom line returns .

In general, there are two broad but distinct categories that help differentiate the products in the dividend ETF space: consistency and yield. Certain dividend-focused ETFs strive to maximize dividend yields, while others focus on companies that have consistently made distribution payments. This distinction is an important one as it has a big impact on a portfolio's yield profile. Typically, funds that value consistency over yield tend to invest in companies thatare often considered some of the safest firms in the world and tend to be in more stable industries as well. The trade-off, however, is that these ETFs typically offer lower yields.

For those investors who wish to employ a dividend consistency strategy, there are a number of funds available on the market, but the two most popular funds by far are State Street's SDY and Vanguard's VIG.

SPDR S&P Dividend ETF (SDY)

This ETF is perhaps one of the most popular choices among dividend consistency investors with over $9.2 billion in total assets and an average daily trading volume of over 960,000 shares. SDY is somewhat of a hybrid product, since it focuses on both consistency and yield. The fund tracks the S&P High Yield Dividend Aristocrats Index, which is designed to select stocks of companies that have increased dividends every year for at least 25 consecutive years. The resulting portfolio consists of securities that have both capital growth and dividend income characteristics, as opposed to stocks that are pure-yield or pure-capital oriented.

Dividend Appreciation ETF (VIG)

Similar to SDY, this ETF tracks an index that is designed to measure theperformance of U.S. common stocks that have a history of increasing dividends for at least ten consecutive years. VIG's portfolio consists ofroughly 140 holdings and exposure is tilted most heavily towards consumer, industrials and energy.VIG's components are generally well-known, blue chip firms: the top 10 holdings include megastocks IBM, Coca-Cola, Procter & Gamble, Wal-Mart and PepsiCo. And although SDY has a slightly higher dividend yield, investors can snatch up VIG at a fraction of the cost; SDY charges an expense ratio of 0.35%, while VIG charges a mere 13 basis points.

And although SDY and VIG are usually investors top picks, there are other notable dividend ETFs in this category that are certainly worth a closer look:

  • Dividend Achievers (PFM): This ETF tracks an index that isdesigned to identify a diversified group of dividend paying companies that have increased their annual dividend for ten or more consecutive fiscal years. PFM holds a basket of approximately 200 individual securities, but it's top ten holdings account for more than 40% of total assets.
  • High Yield Dividend Achievers (PEY): Another hybrid product, this ETF is comprised of 50 stocksselected principally on the basis of dividend yield and consistent growth in dividends .
  • Morningstar Dividend Leaders Index Fund (FDL): This fund tracks an index that offersexposure to large and mega cap firms that have shown dividend consistency and dividend sustainability in years past. FDL's portfolio consists of nearly 100 stocks, but exposure is heavily tilted towards health care, utilities and the consumer sectors.
  • Intl Dividend Achievers (PID): This ETF puts an international twist on the dividend consistency strategy. PID offers exposure to consistent dividend paying companies from around the globe, including both emerging and developed markets.

Follow me on Twitter@DPylypczak

Disclosure: No positions at time of writing.

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