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Stocks Dip; 2 Breakouts To Watch If You Like Big Dividends

Key U.S. stock index funds remained slightly lower Friday afternoon on a disappointing jobs report.

X SPDR S&P 500 (SPY) dipped 0.2%, while SPDR Dow Jones Industrial Average (DIA) and PowerShares QQQ Trust (QQQ) were fractionally lower in the stock market today.

Overseas stocks underperformed as iShares MSCI Emerging Markets (EEM) lost 0.6%; iShares MSCI EAFE (EFA)pared its loss to 0.2%.

Energy, retail and real estate led the downside among sector funds. Gold miner, homebuilder and bank ETFs were among the biggest gainers.

SPDR S&P Oil & Gas Exploration & Production (XOP) and VanEck Vectors Oil Services (OIH) slid about 2% each. PowerShares DB Oil (DBO) and United States Oil (USO) sank roughly 3% apiece. West Texas intermediate crude prices skidded 3% to $49.26 a barrel.

Big Dividend Plays To Watch

Two big-dividend plays are in or near buy range as the stock market hovers near record highs.

ALPS Sector Dividend Dogs (SDOG) has yet to close above a 44.50 flat-base buy point despite recent breakout attempts. It climbed 2% from a February flat-base breakout to the start of the current pattern, but gave back those gains and then some as it's consolidated.

The fund, which marked its fifth anniversary in June, has gathered $2.3 billion in assets. SDOG tracks the S-Network Sector Dividend Dogs Index and aims to provide exposure to big dividend payers in the S&P 500. It invests in the five highest-yielding stocks in each of the 10 Global Industry Classification Sectors and equal weights the sectors and stocks.

General Motors (GM), Invesco (IVZ), Valero Energy (VLO) and AT&T (T) were among its top holdings as of Oct. 4. Each of the 50 stocks in its portfolios account for about 2% of assets.

SDOG has lagged the S&P 500 this year through Oct. 5 with an 8.4% return vs. the benchmark index's 15.1% gain, according to Morningstar Direct. Its average annual return also trails over the past three years, but is in line over the past five years with a 14.4% return vs. the S&P 500's 14.1% gain.


IBD'S TAKE: General Motors pays hefty dividends, but how does it fare in its industry group? Stocks that lead their industry group often make the strongest price advances. Find out where GM stands now at IBD Stock Checkup.


The ETF yields 3.3%, well above the 1.9% average yield of the S&P 500. Its expense ratio is 0.40%.

WisdomTree U.S. SmallCap Dividend (DES) remains in a buy zone from an 84.46 entry of a lengthy flat base cleared Monday. It rose 10% from a November breakout from a flat base to an early December high, which marked the start of the most recent flat base.

The $2 billion fund, which tracks the index bearing the same name, offers exposure to small-cap dividend payers. Industrials made up the biggest sector weighting at 19% of assets, followed by consumer discretionary 18.5%, real estate 14% and financials 11%. Its top holdings included CVR Energy (CVI), and Kronos Worldwide (KRO) and GameStop (GME).

The 11-year-old fund is up 5.2% YTD and has an average annual return of 14.1% over the past five years. Its 10-year average annual return of 8% is slightly ahead of the S&P 500's 7.4% gain.

DES yields 2.9% and carries a 0.38% expense ratio.

Of Thursday's picks, iShares Russell Mid-Cap Value (IWS) is still in buy range, while First Trust Value Line Dividend (FVD) has yet to stage a breakout.

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