8 Foreign ETFs with Attractive Year-End Distributions

I have to admit, determining who is distributing dividends quarterly, semi-annually or annually is more difficult than in years past. That’s because you have ETF families like WisdomTree that shifted from annual payouts to quarterly distributions.

Nevertheless, there was an enthusiastic response to yesterday’s feature on capitalizing on large, year-end dividend payments. So I decided to hone in on 8 foreign ETFs (7 foreign, 1 global) that might be worth pursuing; that is, if you were thinking of buying one of these ETFs in 2009, the year-end income stream provides a bit more incentive.

8 Foreign ETFs With Venerable Year-End Distributions (As of 10/8)
						Anticipated %
				(Note: This is the December payment, not an annual %)
iShares MSCI Malaysia (EWM)						1.4%
iShares MSCI Austria (EWO)						1.8%
iShares MSCI Australia (EWA)						2.3%
Claymore China Real Estate (TAO)						2.0%
Claymore BRIC (EEB)						1.6%
Vanguard Emerging Markets (VWO)						3.0%
Vanguard Europe Pacific (VEA)						2.8%
Market Vectors Steel (SLX)						2.5%

Full Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company may hold positions in the ETFs, mutual funds and/or index funds mentioned above.

Comments

[Ron Rowland:]

Everyone needs to understand that the ETF's NAV will drop by EXACTLY the same amount as the distribution. You are not "capturing" anything except possibly some additional tax implications.

Oct 09 09:11 AM

[Sam Deprist:]

Gary,
what's about TKF - Turkey's ETF? It had pretty good distributions in the past.

Oct 09 09:56 AM

[Alex Filonov:]

Past distributions are not guaranteed in future. And Ron Rowland is absolutely right: NAV, and price, drop the same amount as the distribution. For CEFs, you can play it if CEF provides for dividend reinvestment, you can buy at the drop and sell a little bit later, when fund buys own shares for DRIPs. No such luck for ETFs.

Oct 09 12:10 PM

[Shishir Nigam:]

Looking at ETFs for a dividend payout is should be quite a small factor in evaluating an ETF. If an investor is looking for a stable dividend stream and has enough risk appetite to invest in an emerging market ETF, then there many other assets that have a better yield than the ETFs mentioned above. (Many stocks, unit trusts and even many bonds)

The main motivation to purchase and emerging market ETF should be capital appreciation because if you're looking for dividends, there's many other better avenues.

Your analysis is valid, I'm just not sure if it would affect investment decisions much with regards to ETFs.

For more analysis, check out my blog: youngandinvested.com

Oct 09 01:56 PM

[Jon G:]

The only thing you are incurring by investing in an ETF or mutual fund with a large dividend payment is a nice tax bill --

Oct 09 03:58 PM

[BGRT:]

I'm glad WisdomTree moved on from annual to quarterly. The only good thing about a distribution is that it provides income, which is less desirable than capital gains unless you're dependent on the dividend stream (in which case you'd prefer quarterly distributions).

Oct 10 07:24 AM

[joesan:]

Exactly right..a tax obligation..stupid post by the author!


On Oct 09 09:11 AM Ron Rowland wrote:

> Everyone needs to understand that the ETF's NAV will drop by EXACTLY
> the same amount as the distribution. You are not "capturing" anything
> except possibly some additional tax implications.

Oct 10 01:26 PM

[maal:]

Do I have a deal for Gary Gordon! Gary, send me $10,000 and I will only charge you 1% annual fee and issue you a WHOPPING 10% dividend every year! And you thought these measly 1-2% dividend payouts were a good deal.

Oct 16 12:41 PM