Claymore Launches Dividend-Rotation ETF

Claymore Securities launched its 34th ETF, Claymore/Zacks Dividend Rotation (AMEX: - ), on Wednesday. The ETF tracks the Zacks Dividend Rotation Index.

The fund starts with a universe of 1,500 dividend-paying stocks and jumps into 100 that are scheduled to pay a dividend. It thereby weeds out stocks that already have paid a dividend. But the ETF itself doesn't sport a dividend yield because it hasn't yet declared one.

It holds stocks for at least 61 days to take advantage of the qualified dividend income tax rate. That way the dividend is taxed at a lower rate instead of an investor's regular income tax rate. Holdings change on a monthly basis because the index really is made up of two subindexes that are alternately reconstituted every other month.

Sector And Country Rotation

The ETF is modeled after Claymore/Zacks Sector Rotation (AMEX: - ) and Claymore/Zacks Country Rotation (AMEX: - ), which move into what's hot and out of what's not, according to Zacks Investment Research's in-house indicators.

In the past 12 months, the sector rotation ETF gained 18% vs. 8% for the S&P 500. The country rotation fund has lifted 6% since inception July 11. The benchmark MSCI EAFE index meanwhile edged up 1% over the same period.

Companies in Zacks dividend rotation index range from $200 million and $450 billion in market cap.The current portfolio is 51% weighted in financials, 8% each in utilities and consumer staples and 6% in energy. Between 4% and 3% of assets are allocated to each stock.

Industry Heavy

The fund will tend to be heavy in one sector because companies in the same industry often dish out their dividends at the same time, said David Cohen, managing director of Claymore Securities.

Corus Bankshares (NasdaqGS: - ), the largest holding, offers a quarterly dividend of 25 cents a share. That amounts to an annual dividend rate of 9.6% at the current share price of 9.97, as of Thursday. The stock is trading at a four-year low and is 60% below its 52-week high.

The Chicago-based bank provides commercial real estate loans secured by condos, offices, hotels and apartments throughout the country. As an obvious result of the real estate bubble, it has missed analysts' earnings estimates the past four quarters. Just a year ago, it boasted a record nine straight quarters of upside earnings surprises.

The second-largest position, Oriental Financial Group (NYSE: - ), pays out a quarterly dividend of 14 cents a share, about a 5% annual yield. Earnings grew 320% in the second quarter. But they've been flat each of the 10 quarters prior. Analysts see triple-digit growth the next three quarters.