Even when the market is as volatile as it is right now,
companies are loath to reduce their dividend payouts for fear of
spooking investors even further. Thus, focusing on dividend-paying
stocks allows you to temper general market losses with regular
Thereâs an ETF for that. Actually, there are 49. WisdomTree
has long embraced the power-of-dividend rhetoric, and is
responsible for more than half of the 49. You can buy a
high-dividend ETF that focuses on U.S. stocks, global stocks,
developed market stocks, emerging market stocks, Europe, Asia
Pacificâeven the Middle East. The majority of these funds select
and weight securities based on their dividend yields, so youâre
getting the highest possible exposure to attractive dividends.
I was curious about the extent to which the dividend theory was
true, so I looked at a few global dividend fundsâthe First Trust
Dow Jones Global Select Dividend ETF (NYSEArca:FGD), the Guggenheim
S'P Global Dividend Opportunities ETF (NSEArca:LVL) and the
WisdomTree Global Equity Income (NYSEArca:DEW)âand compared them
with the iShares MSCI ACWI Index Fund (NYSEArca:ACWI).
The difference that dividends make can be pretty strikingâFGD
outperformed ACWI by 3.4 percent since Aug. 1, 2011. LVL and DEW
also outperformed ACWI, albeit less impressively than FGD.
I also pulled data from the past three years to see how
consistent the trend is. For the most part, FGD has been
consistently ahead, ending the three-year period up nearly 22
percent, in comparison with ACWIâs 9 percent return.
Still, the story would have been different if you had been
looking at these securities from September 2008 through June 2009,
when ACWI beat all three dividend ETFs.
One cautionary note I would include is that FGD has a slightly
smaller cap tilt than ACWI or DEW, which could make it a riskier
Still, the numbers speak for themselves. Even if you arenât
worried about the recent volatility, high-yielding dividend ETFs
are valuable portfolio components.
Don't forget to check IndexUniverse.com's ETF Data
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