PEY is an index for Mergent Dividend Achievers. Mergent uses a proprietary methodology to pick out the top 50 highest dividend paying stocks. Companies must have increased their dividends 10 years in a row. The dividends are paid to shareholders on a monthly basis. Each quarter, the list of stocks are rebalanced.

This index greatly reduces trading cost, since you don't have to go out and buy the top 50 dividend stocks. The monthly dividend payment will help ease personal cashflow.

I am a big fan of Mergent. I believe in their methodology. Personally, I would not buy a company with less than 10 years in history. If a company can increase dividends in this recessionary environment, they must be doing something right.

Currently, PEY is lagging the market. Cyclical stocks had a big rally that left many blue chips in the dust. Investors are looking for green shoots and looking for a quick rebound in economy. If the economy does rebound quickly in a V shape pattern, then their plays are dead on. However, in my view, the recession will drag on into 2010 and probably fully recover in 4 to 5 years. During that time, the dividends can help ride the doldrums out. On top of that, the top 50 stocks are financially very strong, and it is matter of time before the rally catches up to PEY.