International Dividend ETFs Remain Solid Ideas

Markets ETF Trends

Ex-U.S. developed market dividend payers often feature larger yields than their U.S. counterparts, an assertion proven by comparing large- and mega-cap dividend stocks from familiar dividend sectors such as consumer staples, energy, financial services and telecommunications.

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Low interest rates in the U.S. have sent investors flocking to dividend stocks and exchange traded funds in recent years. With central banks throughout the developed world paring rates and engaging in monetary easing, government bond yields are falling, giving investors good reason to consider international dividend ETFs.

Related: Best of Both Worlds With This Dividend ETF

An option to consider among international dividend ETFs is the iShares International Select Dividend ETF (NYSEArca: IDV). IDV requires that components be taken from developed countries in Europe, Pacific, Asia and Canada. Securities must also meet dividend payout consistency and growth metrics, along with profitability and minimum liquidity levels. Holdings are then weighted by dividend yield.

Low interest rates in the U.S. have sent investors flocking to dividend stocks and exchange traded funds in recent years. With central banks throughout the developed world paring rates and engaging in monetary easing, government bond yields are falling, giving investors good reason to consider international dividend ETFs.

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IDV “is one of the largest dedicated to international dividend investing. The IDV tracks the Dow Jones EPAC Select Dividend Index, which is a measure of high-dividend stocks in non-U.S. developed markets. The international dividend ETF tracks high-paying equities and screens for those that have consistently paid those dividends over longer periods of time,” according to Kiplinger.

Related: How to tap Into Developed Market Dividend Growth

Other international dividend ETFs include the PowerShares International Dividend Achievers Portfolio (NYSEArca: PID), FlexShares International Quality Dividend Index Fund (NYSEArca: IQDF) and the WisdomTree International Dividend ex-Financials Fund (NYSEArca: DOO).

PID offers ample exposure to many of the blue-chip laden sectors dividend investors favor when mining for U.S. income stocks. PID’s energy exposure gives the ETF leverage to a recovery in that beaten up sector, but it also makes the ETF vulnerable in the event of further oil price declines.

A falling dollar could lift IDV’s yield “as weaker local currencies convert into the stronger dollar. That would provide a nice boost to an investor’s purchasing power over the long term,” notes Kiplinger.

iShares International Select Dividend ETF

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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