The recent proliferation of new dividend ETF
has been duly noted
However, with investors continuing to put capital to work in
, some of the non-U.S. focused members of this group may be
worthy of consideration as well.
Emerging markets and the corresponding ETFs are making their
respective presences felt on the dividend scene. It is estimated
that the 300 largest non-bank members of the MSCI Emerging
Markets Index paid a
combined $52. billion in dividends last year
, up from just over $48 billion in 2011.
With emerging markets firms climbing the dividend ladder, some
investors may be apt to wonder what the dividend outlook is in
the largest developing nation of them all: China. In the essence
of restraint, it is fair to say that China's dividend picture is
poised to improve.
At the behest of Beijing, Shanghai-listed firms will are being
to payout 30 percent of their profits in the form
, and if they do not, they need to offer a good explanation as to
That effort could shine the spotlight on the newly minted
WisdomTree China Dividend Ex-Financials Fund (NASDAQ:
), which debuted last September. As its name implies, the ETF
offers no exposure to Chinese banks, a stark departure from
well-established funds tracking the country such as the iShares
FTSE China 25 Index Fund (NYSE:
Skirting bank exposure is not necessarily a bad thing,
particularly in the case of a China ETF. After all, that sector
showed negative dividend per share growth last
. Given that Chinese banks are massive in size, 2012 dividend
cuts by some of the sector's constituents skewed overall Chinese
dividend per share growth.
Dividend per share growth in China last year was just under 15
percent for all companies, according to Markit Equities Research.
However, the best rates of growth were seen in the utilities,
telecommunications and food and beverage sectors. Combined, those
represent nearly a third of CHXF's weight
That implies CHXF is ideally positioned to take advantage of
rising Chinese dividends, a theme that has already been seen over
the past decade. From September 2002 through September 2012, the
trailing 12-month dividend growth on the MSCI China Index was
over 17 percent. That beat the MSCI Emerging Markets Index, the
MSCI EAFE Index
and the S&P 500
Notably, China is taking steps to foster dividend growth. The
country said last year it would slash the dividend tax by 50
percent to encourage long-term investors to hold dividend-paying
stocks for a year or more. Policymakers there have acknowledged
that dependable, steady dividends are a way of attracting
institutional investors with a long-term view of Chinese
A deeper look at CHXF reveals the ETF caps sector exposure at
25 percent and single-stock weights at 10 percent. The fund's top
four holdings are all U.S.-listed and the yields on these names
are decent. China Mobile (NYSE:
) yields 3.4 percent. Cnooc (NYSE:
) is the laggard at 1.7 percent while Sinopec (NYSE:
) yields 2.5 percent. With a dividend yield of 3.1 percent,
) matches rival Chevron (NYSE:
) while outpacing Exxon Mobil (NYSE:
CHXF's 23.7 percent exposure to the energy sector could prove
useful going forward because all three of the aforementioned
Chinese energy giants are state-run and plenty of governments,
China included, have shown they want rising dividends from the
companies they control.
For more on new dividend ETFs, click
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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