Be wary of dividend ETFs

According to Roya Wolverson of SmartMoney Magazine, dividend ETFs are a tricky hand to play. Some experts recommend dividend stocks as a solid long-term holding, she says; dividend ETFs have a total of $8 billion in assets.

Unfortunately, a lot of those funds are heavy on financial stocks. The financial crisis has led companies to cut dividends by $35 billion in the first half of 2008, Wolverson writes.

She warns against using the dividend-coverage ration as a gauge of a company’s ability to pay.