2014 has marked a milestone in the growth story of the U.S. economy, as we are now on the cusp of the full employment level long after the cursed recession. The economy grew at the rate of 4.6% in Q2 and 3.9% in Q3 ─ not a small feat for a still-recovering developed economy, saw the S&P 500 (SPX) hit new highs close to 50 times and cross the 2,000 mark for the first time in history; still the year was not devoid of concerns.   

Geopolitical concerns overpowered in the initial part of the year while global growth worries and an unbelievable crash in oil prices in the latter half swept away the risk-on trade mood occasionally. Though the U.S. bourses hit highs in 2014, dumping of growth and momentum stocks thanks to overvaluation concerns (especially after the monumental 35% gains recorded by the S&P last year), Fed uncertainty and Western sanctions on Russia forced the broader markets to move up and down at regular intervals.

Ultra-low interest rates in most developed nations, stepped-up monetary easing in Japan, QE talks in the Euro zone and more accommodative policies in the world’s second largest nation China kept the benchmark 10-year Treasury bond yields at a muted level throughout the year.

These trends have put dividend ETFs in focus, and helped the segment to perform well on the year too. The craving for dividends increased when the Fed repeatedly promised to keep rates low for longer even after ending the third round of quantitative easing. If this wasn’t enough, investors should note that most of the dividend paying companies are stable and mature with solid cash flows that provide greater stability and safety in a volatile environment.

Notably, the 10-year U.S. Treasury yield was low at 2.14% despite the Fed’s latest vows of protracted low rates. This happened because nervous investors chose a flight to safety thanks to the Russian rout, and broad oil crash to close out the year. These low rates could keep interest high in dividend-focused securities, and especially if rates remain subdued for much of 2015.

Best of the Year 

Below, we discuss three of the best performing dividend ETFs of 2014. All three have beaten out the S&P 500 for the year (which added about 11%), and have dividend yields in excess of this key American benchmark (about 1.83%) as well as the benchmark U.S. bond yield (read: 3 Dividend ETFs Crushing the Market).

These top performers could see more upside going into 2015 as well, especially if low rates remains the focus and the trend in the income market continues, suggesting that any of the following income funds may be top selections for those seeking a dividend play in 2015 too (read: 3 Unbeatable Dividend ETF All-Stars for Your Portfolio):  

RevenueShares Ultra Dividend Fund (RDIV) ─ Up 19.6%

This ETF could be a quality income option, using stocks from the S&P 900. The firms are selected for inclusion in the index based on the average 12-month trailing dividend yield in each of the previous trailing 4 quarters, giving the product roughly 60 holdings overall. The fund has amassed about $47.1 million in assets.
 

Utilities takes the top spot in this product, making up about 38.0% of assets. Other top sectors include communications (17.5%), and consumer non-cyclical (16.4%), while the product does a good job across individual companies giving no more than 5.02% to any single stock.

RDIV’s Yield comes in at 3.34%, making it a solid income destination. Additionally, investors should note that it has a modest expense ratio, coming in at just 49 basis points a year.

Investors should note that this ultra dividend fund’s yield is not too great to be considered a sole income destination. However, it has shown solid capital appreciation of about 17% this year, beating out the S&P 500’s 9% gains. The fund has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

PowerShares S&P 500 High Dividend Portfolio (SPHD) ─ Up 17.8%

This fund follows the S&P 500 Low Volatility High Dividend Index and holds 50 securities, which have historically provided high dividend yields and low volatility. It is widely spread out across individual securities as each holds less than 3.06% of assets. From a sector look, utilities takes the top spot with more than one-fifth of the portfolio while consumer staples, financials and energy round off the next three positions (read: Endure Market Volatility with These ETFs).

The fund has so far managed assets worth $245.7 million. Expense ratio came in at 0.30%. The ETF has added 15.4% for 2014. The fund also has an impressive dividend yield of 3.45%.

Global X SuperDividend U.S. ETF (DIV) ─ Up 16.2%

This dividend ETF is an income superstar in the true sense. Not only has the fund added about 13.8% since the start of January, it pays out a robust 5.83% in yield too. The fund tracks an equally weighted index that holds the 50 highest dividend yielding equity securities in the U.S.

The product gives top-notch weight to utilities (21.4%) followed by energy (21.3%) and mortgage REITs (15.8%). TC Pipelines LP (2.87%), Iron Mountain Inc. (2.73%) and Altria Group Inc. (2.65%) are the top three holdings of the fund.

The fund has accumulated about $302 million in assets since its launch in March 2013. The expense ratio of the fund stands at 45 basis points a year. The fund has returned about 13.8% for 2014.