Some long-time income investors know that larger payouts and
higher yields can often be with the foreign equivalent of a U.S.
stock. For example, BP's (NYSE:
) current yield is more than double that of Exxon Mobil's (NYSE:
). French pharmaceuticals giant Sanofi (NYSE:
) yields 30 basis points more than Johnson & Johnson (NYSE:
Those are just two examples, but throughout sectors such as
consumer staples, energy, health care and telecommunications,
investors can usually find a couple of developed market
large-caps that offer superior yields relative to their U.S.
Still, U.S. equity dividend
have nearly $50 billion in combined assets under
, an amount that dwarfs that of international dividend funds.
That does not mean that there are not some developed market
dividend ETFs worthy of investors' attention. Consider some of
the following ETFs:
PowerShares International Dividend Achievers Portfolio (NYSE:
) Like many domestically-focused dividend ETFs, PID employs
length of dividend increase streaks as part of its screening
methodology. However, PID is not as stringent as some U.S. ETFs
as the qualification for inclusion here is five years of rising
dividends, not the ten or more often seen with U.S.
Important to note about PID is that it also weights by
dividend yield, not market capitalization, meaning that if/when
global high yield stocks fall out of favor, then PID's volatility
and downside potential increase. Also adding to the volatility
with PID is a more than 20 percent weight to energy stocks, by
far the ETF's largest sector weight. Some of those names include
Teekay Offshore Partners (NYSE:
), Teekay LNG Partners (NYSE:
) and Norway's Statoil (NYSE:
Investors can take some comfort in knowing U.S. stocks account
for 25.1 percent of PID's weight, although the 30-day SEC yield
of 2.62 percent is not particularly jaw-dropping. The U.K. and
Canada are PID's next largest country weights, combining for 43
percent of the ETF's weight.
Overall, it is hard to argue with PID's long-term returns.
Over the past three years, the ETF is up nearly 30 percent while
offering less volatility than and outperforming some developed
and developing market dividend ETFs
. PID has also outpaced and been less volatile over that time
than the iShares MSCI EAFE Index Fund (NYSE:
). PID has an expense ratio of 0.56 percent and $779 million in
assets under management.
WisdomTree Europe SmallCap Dividend Fund (NYSE:
) It is not a stretch to say many investors have heard at least
one of the popular emerging markets small-cap ETFs on the market,
say the Market Vectors Brazil ETF (NYSE:
) or the WisdomTree Emerging Markets SmallCap Income Fund (NYSE:
). Given the popularity of those funds, it is almost hard to
believe there is just one small-cap ETF devoted to Europe and it
Despite the recent Eurozone calamity, including Italy's
election results and one index provider demoting Greece to
emerging markets status, DFE has actually been an impressive
gatherer of assets on a percentage basis. On February 11,
DFE had $52 million in AUM
. Today that number is over $62.1 million.
The 30-day SEC yield of 3.72 percent is fairly attractive, but
with DFE being a small-cap fund, investors need to know what they
are getting at the sector level. The ETF is light on
traditionally conservative dividend sectors such as staples,
telecommunications and utilities and heavy on industrials and
Italy, Spain and Portugal combine for about a quarter of DFE's
weight and that might imply an uncomfortable level of volatility
for some investors. In reality, DFE's underlying index since
inception has had a lower beta and been less volatile than the
MSCI Europe Small-Cap Index,
according to WisdomTree data
. DFE's annual expense ratio is 0.58 percent.
First Trust Dow Jones Global Select Dividend Index Fund (NYSE:
) As is the case with PID, the First Trust Dow Jones Global
Select Dividend Index Fund offers some level of comfort with an
almost 17 percent allocation to the U.S. Additionally, just four
Eurozone nations are found among FGD's lineup and Spain is the
only PIIGS member represented in this ETF.
With $294.3 million in AUM, FGD has an even more seductive
number associated with it: A 30-day SEC yield of 6.12 percent.
Looking the ETF's sector breakdown, it is easy to understand why
the yield is so robust. Telecommunications and utilities names
combine for over 38 percent of the fund's weight.
Another point in FGD's favor is an 18 percent weight to
Australia, a high-yield currency nation that has dodged outright
recession for over two decades. Sweden and New Zealand, another
pair of solid, strong currency nations, combine for another eight
percent of FGD's weight. FGD, which has annual expense ratio of
0.63 percent, has a lower beta and standard deviation than MSCI
according to First Trust data
For more on ETFs,
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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