3 Global Dividend ETFs With 7% Yields

May 06, 2013 4:34 PM ETDWX, LVL, SDIV1 Comment
Tom Lydon profile picture
Tom Lydon
78.45K Followers

Risk and returns often go hand-in-hand, and income hunters who are willing to stomach a little more risk can look overseas for attractive dividends in globally focused exchange traded funds.

With the Federal Reserve depressing yields on U.S. government bonds, investors have branched out to riskier investments for yields.

"What we have is money that had typically gone to fixed income now coming into equities," Chris Wallis, chief investment officer of Vaughan Nelson Investment Management, said in a Wall Street Journal article. "They're looking for bond substitutes and it doesn't mean that the money is going to exit and go either to cyclical stocks or go to cash. I think it's going to stay where it is."

For starters, the Global X SuperDividend ETF (SDIV), which tracks the performance of 100 equally weighted companies with some of the highest dividend yields in the world, comes with a 7.67% 12-month dividend yield and a 0.58% expense ratio. The fund is up 11.3% year-to-date.

Regional breakdowns include North America 33.6%, Latin America 3.4%, U.K. 12.3%, Developed Europe 13.2%, Emerging Europe 3.8%, Australasia 23.7% and developed Asia 10.0%. The fund is primarily composed of developed market stocks at 92.8% of the portfolio, with a 7.2% allocation toward emerging markets.

Sector allocations include basic materials 2.3%, consumer cyclical 8.4%, financials 17.5%, real estate 20.5%, telecom 11.8%, energy 4.7%, industrials 9.5%, technology 4.0%, consumer defensive 3.0%, healthcare 5.9% and utilities 12.7%.

The SPDR S&P International Dividend ETF (DWX) also offers an attractive 7.35% dividend yield. The fund tracks mostly non-U.S. mid-cap companies as it weights holdings by dividend yield, but the highest component weighting is 3.8% of the fund. DWX has a 0.45% expense ratio. The ETF is up 5.1% year-to-date.

However, the high yields do not come without risks.

"It gives the most portfolio weight to the companies with the highest yield, which boosts income but can be risky during times of market distress," according to Morningstar analyst Abby Woodham. "During such periods, high-yielding companies are the unloved bunch, and can trade at a significant discount to their fundamental fair value."

DWX has a significant tilt toward Australia at 28.3% of the overall portfolio, followed by Spain 6.9%, Finland 5.7%, U.K. 5.4%, Sweden 4.8%, Canada 4.8%, Turkey 3.9%, France 3.9%, Thailand 3.6%, Israel 3.5%, Italy 3.4%, Norway 3.0%, Switzerland 3.0%, South Africa 2.6%, Netherlands 2.5%., Belgium 2.4%, Czech Republic 2.0%, Germany 1.8%, Brazil 1.5%, Portugal 1.5%, Denmark 1.5%, and China 1.4%. The ETF has a 15.3% exposure to emerging markets and 84.7% to developed markets.

Sector allocations include financials 21.6%, telecom services 18.3%, utilities 15.3%, energy 11.5%, materials 9.4%, industrials 7.7%, information technology 4.9%, consumer discretionary 4.3%, health care 3.2% and consumer staples 3.0%.

The Guggenheim S&P Global Dividend Opportunities Index ETF (LVL) offers a 7.12% 12-month yield. The ETF is comprised of American depositary receipts, or "ADRs," that offer high dividend yields. LVL has a 0.60% expense ratio. The ETF is up 5.3% year-to-date.

Country allocations include U.S. 19.6%, Australia 16.0%, Sweden 7.1%, Israel 6.5%, Belgium 5.6%, Canada 5.1%, France 4.4%, South Africa 3.9%, Thailand 3.7% and Turkey 3.3%. About 85.1% of the portfolio is allocated toward developed economies and 14.9% in emerging markets.

Sector allocations include telecom services 20.7%, financials 19.3%, energy 11.0%, utilities 11.0%, industrials 9.6%, consumer staples 9.1%, materials 9.0%, consumer discretionary 8.4% and information technology 1.7%.

Max Chen contributed to this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

This article was written by

Tom Lydon profile picture
78.45K Followers
Tom Lydon is editor and publisher of ETF Trends, a website with daily news and commentary about the fast-changing trends in the exchange traded fund (ETF) industry. Mr. Lydon is also CEO of Global Trends Investments, an investment advisory firm specializing in the creation of customized portfolios for high-net worth individuals. He has been involved in money management for more than 25 years. Mr. Lydon serves on the Board of Directors for U.S. Global Investors, Inc. and Guggenheim Investments. In early 2010, Mr. Lydon helped create the CNBC Model ETF Portfolios. Mr. Lydon is the author of The ETF Trend Following Playbook, as well as iMoney: Profitable Exchange-Traded Fund Strategies for Every Investor. He is Co-Founder of Virtual Summits, educational virtual events for financial advisors. Visit his site: ETF Trends (http://www.etftrends.com/) ETF Virtual The ETF Virtual Summit is the largest exchange traded fund (ETF) investment conference in the world. ETF Trends and RIA Database host this complimentary, interactive conference that exists completely online. The virtual showroom features keynote speakers, panel webinars, an exhibitor hall, a networking lounge and hot topic forums. Designed exclusively for Financial Advisors, this conference allows you to interact with experts in the ETF industry in a unique, virtual environment, avoiding the hassles and costs of traveling. Details on the conference, including agenda, past attendee statistics and sponsor information can be found at www.ETFVirtual.com. Alts Virtual The Alts Virtual Summit is the leading Alternative Investment conference for financial advisors. ETF Trends and RIA Database host this complimentary, interactive conference that exists completely online. The virtual showroom features keynote speakers, panel webinars, an exhibitor hall, a networking lounge and hot topic forums. Designed exclusively for Financial Advisors, this conference allows you to interact with experts in the Alternative Investment industry in a unique, virtual environment, avoiding the hassles and costs of traveling. Details on the conference, including agenda, past attendee statistics and sponsor information can be found at www.AltsVirtual.com.

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