Dividend-paying stocks continue to be a popular investment theme in the low rate, high volatility environment. With expectations for record low yields on traditional sources of income expected to continue for the foreseeable future, more and more investors (both large and small) are seeking out dividend payers as a critical component of their portfolios. While some prefer to focus on evaluating the bestdividend stocks, there has also been a surge in interest for dividend-focused ETFs. There are now more than 50 ETFs that specifically target dividend-paying stocks, including variations that focus on yield, consistency, and other characteristics.

The dividend ETF space, like the ETF industry in general, is top-heavy; there are a handful of funds that represent the bulk of assets. In this case, the Vanguard Dividend Appreciation ETF (VIG), iShares Dow Jones Select Dividend Index Fund (DVY) and SPDR S&P Dividend ETF (SDY) have about $30 billion in aggregate assets; the remaining four dozen or so dividend ETFs combine for far less than that. But just because a fund is large doesn't mean it's the best option out there. Below we profile seven smaller dividend ETFs that offer compelling investment strategies:

EGShares Low Volatility Emerging Markets Dividend ETF (HILO)

YTD Performance:-0.1%

Yield:6.4% (index dividend yield as of 3/31)

What Makes HILO Unique:Emerging markets often exhibit significant volatility, so there is obvious appeal in a strategy that allows investors to tap into this promising asset class while minimizing their downside risk. HILO consists of a portfolio of stocks that are selected based on dividend yield and diversification benefits, resulting in an ETF that can be used to smooth volatility while simultaneously delivering higher dividend yields.

WisdomTree Global Natural Resources Index Fund (GNAT)

YTD Performance:-7.2%

Yield:3.05%(30-day SEC yield, as of 6/21)

What Makes GNAT Unique:This ETF delivers a combination of two compelling (and increasingly popular) investment themes: natural resources and dividends. GNAT is linked to an index that consists of the 100 largest natural resource stocks globally, including energy firms, mining companies, and a variety of other asset producers. And because the allocations to individual ETFs are determined by dividend yield (i.e., higher yields get larger weightings), this ETF can offer up attractive current returns.

The underlying index currently has a dividend yield of almost 4%, and a P/E ratio of only about 8.2x.

Guggenheim ABC High Dividend ETF (ABCS)

YTD Performance:-3.6%

Yield:5.8% (30-day SEC yield as of 6/18)

What Makes ABCS Unique:This ETF consists of a unique blend of economies; the underlying portfolio is split between Australia (34%), Canada (23%), and Brazil (44%). While those three markets have very little in common in terms of geography or development status, they do share a wealth of natural resources. Though ABCS doesn't specifically target natural resource stocks, it does target markets who are major exporters of key commodities, a characteristic that could be beneficial over the long haul.

First Trust ValueLine Dividend Leaders Index Fund (FVD)

YTD Performance:+2.8%

Yield:2.9%(30-day SEC yield as of 5/31)

What Makes FVD Unique:This ETF is extremely balanced; no one stock makes up more than about 0.7% of the total portfolio, and there are about 170 individual components. For investors who place stock in the Value Line Safety Rankings this fund might be very appealing. In order to be included, stocks must get a ranking of #1 or #2 on that criteria and have a dividend yield that exceeds the S&P 500. Though FVD's yield isn't enormous, it represents access to relatively safe current returns.

WisdomTree Europe SmallCap Dividend Fund (DFE)

YTD Performance:+5.0%

Yield:3.7% (30-day SEC yield, as of 6/21)

What Makes DFE Unique:This ETF, as the name suggests, targets exclusively small cap European stocks. For investors looking to make a bet on Europe but concerned about taking on excessive risk, DFE can be an interesting option. With a fairly attractive yield and a portfolio diversified across more than a dozen major European economies, DFE could be a handy tool for betting on Europe in anticipation of a turnaround there.

PowerShares International Dividend Achievers Portfolio (PID)

YTD Performance:-3.0%

Yield:3.4% (30-day SEC yield, as of 6/21)

What Makes PID Unique:This ETF offers access to the popular dividend achievers strategy with an international twist. In order to be included in the underlying index, stocks must have increased their dividends for at least five consecutive years (a period that includes the downturn in 2008). The result is a portfolio of the most consistent international dividend payers, including both developed and emerging market constituents.

WisdomTree Dividend ex-Financials Fund (DTN)

YTD Performance:+2.5%

Yield:4.0% (30-day SEC yield, as of 6/21)

What Makes DTN Unique:Many dividend-paying ETFs maintain big allocations to the financial sector, since banks and insurance companies generally make meaningful, stable distributions. WisdomTree's broad-based Total Dividend Fund (DTD), for example, allocates about 16% of assets to financials.But for investors concerned about the volatility of financial stocks, that feature can be undesirable. As the name suggests, DTN focuses on dividend payers but specifically excludes all financial companies.

DTN maintains a very balanced sector allocation, which makes it very different from most dividend ETFs. Nine different sectors account for at least 8% of assets, with no one sector representing more than 14% of the total portfolio.

Disclosure: No positions at time of writing.

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