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Global and International Dividend ETFs

The domestic market as defined by S&P 500 Index is now up well over 15% year to date. With this Fed fueled rally, maybe it's time to look abroad for some other investing opportunities. What better way to cash in on this theme than with pocketing more dividends from some choice Global or International Dividend ETFs.

To put the world equity climate into perspective, here below is a One Year chart (Yahoo Finance) of the All Country World - MSCI ex US Index (NASDAQ:ACWX) versus the S&P 500 (NYSEARCA:SPY). The U.S. equity market was a relative standout in a bad global climate. Going forward could be another matter entirely as our own fiscal cliff, potential tax policy changes, and election outcomes overhang the market's intermediate-term outlook.

Investors may assume that Global and International Funds are the same. Investopedia defines the difference as:

Many people confuse a global fund with an international, or foreign, fund. The difference is that a global fund includes the entire world, whereas an international/foreign fund includes the entire world except for companies in the investor's home country.

Read more here.

From Small and Obscure to Broad-Based Dividend ETFs

There are a wide variety of Global and International Dividend ETFs available today. Note that many are rather narrow in focus and obscure such as the thinly traded iShares Asia/Pacific Dividend 30 Index Fund (NYSEARCA:DVYA),or WidsomTree Middle East Dividend Fund (NASDAQ:GULF). Others may cater to specific market cap holdings and regions such as the WisdomTree Europe SmallCap Dividend Fund (NYSEARCA:DFE). There are also now several Emerging Market Dividend funds such as the WisdomTree Emerging Markets Equity Income Fund (NYSEARCA:DEM) or the specialized EGShares Low Volatility Emerging Markets Dividend ETF (NYSEARCA:HILO).

For a more worldly approach: Here is a summary for several "Worldly" Dividend ETFs that offer some broad portfolio dividend exposure.

International Dividend ETFs

SPDR S&P International Dividend ETF (NYSEARCA:DWX):

Index fund tracks before fees and expenses: S&P International Dividend Opportunities® Index

Expense Ratio: 0.45%

Approximate 12-month Yield: 7.6%

Top Five Country allocations:

Spain 16.8%

Australia 13.4%

France 10.86%

Italy 6.3%

United Kingdom 6.2%

Bottom Line Opinion: This fund has its highest allocation to Spain and its second highest to resource rich and China dependent Australia. With daily business headlines of China slowing down markedly and Spain's debt crisis, I think I'll pass on this fund. That juicy yield comes with lots of risk. Click to get Fact Sheet and Prospectus.

iShares Dow Jones International Select Dividend Income Fund (NYSEARCA:IDV):

Index fund tracks before fees and expenses: Dow Jones EPAC Select Dividend Index

Expense Ratio: 0.50%

Approximate 12 month Yield: 5.15%

Top Five Country allocations:

Australia

20.35%

United Kingdom

17.56%

Hong Kong

6.84%

France

6.65%

Italy

6.12%

Bottom Line Opinion: This fund invests in the highest-yielding securities in the developed world (except the U.S.), excluding REITs. Its Index is the Dow Jones EPAC Select Dividend Index. In 2008 it had a nasty return of -54%. That 2008 loss was much more than PID at -46.6%. China appears to be having a hard landing and this fund has an overweighting in China's chief resource supplier - Australia at 20.35%. This could be a risky recipe. Click to get Fact Sheet and Prospectus.

PowerShares International Dividend Achievers Portfolio (NYSEARCA:PID):

Index fund tracks before fees and expenses: International Dividend Achievers™ Index

Expense Ratio: 0.58%

Approximate 12 month Yield: 2.6%

Top Five Country allocations:

Canada 19.51%

United Kingdom 18.71%

United States (ADRs) 14.26%

Spain 8.16%

Chile 4.97%

Bottom Line Opinion: This International Dividend ETF from the folks at PowerShares has the longest history. Its inception date is 9/15/2005. The funds index is reconstituted annually and rebalanced quarterly. The Index it tracks comes from notable Dividend Index pioneers, Mergent. This International Dividend Achievers Index seeks out companies that have increased their annual dividend for five or more consecutive years. I like its longer history and its current total return outperformance over 3 years of 24.8% compared with DWX at 5.27% and IDV at 22.4%. Click to get Fact Sheet and Prospectus.

Global Dividend ETFs

WisdomTree Global Equity Income Fund (NYSEARCA:DEW):

Index fund tracks before fees and expenses: WisdomTree Global Equity Income Index

Expense Ratio: 0.58%

Approximate 12 month Yield: 6.81%

Top Five Country allocations:

United Kingdom 15.19%

United States 13.69%

Australia 10.03%

France 7.82%

Germany 5.59%

Bottom Line Opinion: Average volume of only about 10,000 shares a day warrants some caution before taking a position. Use limit orders. This ETF is based on a WisdomTree Global Equity Income Index. WisdomTree weights the holdings by annual cash dividends paid. Its top three sectors are Financials, Telecoms and Energy. It has over 600 holdings. If you are looking for income instead of total return this fund seems to be solid choice with a healthy dividend history. Click to get Fact Sheet and Prospectus.

First Trust Dow Jones Global Select Dividend Index Fund (NYSEARCA:FGD):

Index fund tracks before fees and expenses: Dow Jones Global Select Dividend Index

Expense Ratio: 0.60%

Approximate 12 month Yield: 5.13%

Top Five Country allocations:

Australia 16.19%

United States 14.15%

United Kingdom 12.04%

Canada 6.74%

France 6.55%

Bottom Line Opinion: This ETF also has a somewhat light daily trading volume of about 34,000 shares, so limit orders would be a prudent idea. Fund holds 100 highest yielding stocks in its Dow Jones Global Select Index. Components of the Index are weighed by dividend yield and capped at 10%. Performance is very solid with a current winning 3-year total return of 30.3% versus the other Global Dividend ETFs mentioned here - with DEW at 21.7% and LVL at 13.45%. Click to get Fact Sheet and Prospectus.

Guggenheim S&P Global Dividend Opportunities Index ETF (NYSEARCA:LVL):

Index fund tracks before fees and expenses: S&P Global Dividend Opportunities NR Index.

Expense Ratio: 0.60%

Approximate 12 month Yield: 6.52%

Top Five Country allocations:

United States 27.33 %

Germany 12.50 %

Australia 9.01 %

Netherlands 5.98 %

Spain 4.97 %

Bottom Line Opinion: This fund with a top country allocation of over 27% for the United States is arguably the least "Global" of the three Global ETF funds mentioned here. It also has a large sector concentration in Financials at 27.85%. The numbers of securities is about 102 in its S&P Global Dividend Opportunities NR Index, and it's also quite diverse. This fund holds REITs, BDCs (business development companies) ADRs, etc. The heavy concentrations for sector and country makeup could be looked at as a potential risk. The fund however has a nice solid dividend history and would make an okay choice for an income portfolio. Better choices exist such as FGD if you are looking for total return. Click to get Fact Sheet and Prospectus.

Conclusion

Diversifying an ETF portfolio into some more International and/or Global Dividend offerings may make sense - considering that the U.S. stock market is now well into double-digit returns. When the domestic stock market cools off, Global or International dividend diversification could likely provide some cushion in a diversified portfolio.

Source: Going Abroad With Dividend ETFs