3 Global Dividend ETFs Under $20 To Watch

|
Includes: FDD, LVL, PID
by: Zacks Funds

Every investor's ultimate goal is to reap returns. They get more enthusiastic when they get to gain from a cheap security, i.e., security with a low share price and a low price-to earnings ratio. A low share price often helps investors to buy a fatter lot than occupying a slimmer set of high-ticket securities.

Also, in case of cheap security, a rise by just a few pennies per share can shape up into huge percentage profits. These securities are certainly highly vulnerable. Not hailing from the blue-chip category, these often carry risks associated with low market cap, and high trading costs on account of a wide bid/ask spread. But 'no risk, no reward'.

Still investors, about to dip their toe into this risky world, can check for some investing ideas trending high in the present market. This could minimize the risk of one's portfolio to some extent. One such hot field at present is dividend investing (read: Direxion Launches Two Dividend Focused ETFs).

The wave of easy money polices across the globe, be it Europe or Asia, have brightened the appeal for dividend investing lately. Back home, a depressed inflationary backdrop and a still-wavering labor market held the Fed back from being sanguine over the rate hiking timeline. Both these kept bond yields at check globally.

As a result, investors looking for steady current income shifted their focus to high dividend stocks. These cash payouts can safeguard one's portfolio in bear market movements and ensure steady income in a low yield backdrop.

Thus, we recommend investors to opt for dividend ETFs, preferably international, if they are to go for ETFs under $20. Accommodative policies will shore up both yield and capital gains of the international dividend picks. Though choices are scarce in this genre, we highlight three options from this subset. Investors can keep a watch on them in the days to come (see all World ETFs here).

PowerShares International Dividend Achievers ETF (NASDAQ:PID)

This product tracks the International Dividend Achievers Index which follows companies that have increased their annual dividend for five or more consecutive years. American securities account for one-fourth of the total, taking the top position among countries. U.K. (20%) and Canada (13.6%) take next two spots (read: Dividend ETFs Explained: What Investors Need to Know).

The $1.53 billion-ETF charges investors 54 basis points a year. The fund is tilted toward Energy (33.5%) and Financials (15.2%). The product has a moderate dividend yield of about 2.7%, but looks to be a safer bet given its focus on securities with consistent dividend growth.

The fund holds 87 stocks in total while no stock accounts for more than 4.35% of the total. Over the last one month (as of April 7, 2015), PID was up 4.3%.

The fund is currently trading at around $18, in the middle of its 52-week range $16.67 and $19.80. The fund trades at a P/E (ttm) of 14 times. Investors should note that the U.S. dividend ETF (NYSEARCA:DVY), worth $15 billion, presently trades at a P/E of 18.

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

This ETF follows the S&P Global Dividend Opportunities Index which focuses on high yielding securities from around the world. As many as 100 securities are chosen from around the world for inclusion, with heavy exposure going toward the finance, telecom, utilities, energy and consumer discretionary securities.

American stocks account for roughly 21% of total assets, while European stocks, in aggregate, account for around 30% of the exposure profile. The 12-month yield comes in at 6.17%, while the expense ratio comes in at 1.08% per year.

The $77 million-fund has returned about 3.2% in the last one month (as of April 7, 2015). LVL is priced cheaper as it trades around $11.50. Its 52-week range is $10.98 to $14.49, not even beyond $15. The fund trades at a P/E (ttm) of 13 times.

First Trust STOXX European Select Dividend Index Fund (NYSEARCA:FDD)

This Europe-based ETF follows the STOXX Europe Select Dividend 30 Index, providing exposure to high-dividend yielding companies across 18 European countries. In total, the fund holds 31 securities with the largest allocation going to J Sainsbury Plc at 5.1%. Other firms account for less than 4.95% share. United Kingdom, Switzerland and France make up for the top three country holdings.

The fund is tilted toward the financial sector at 50% while Utilities accounts for double-digit allocation. The fund has amassed $195.2 million in assets and sees good trading volume of around 120,000 shares per day. It charges 60 bps in annual fees and expenses. FDD has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

FDD is also a low-ticket option presently available at around $13.50, slightly above its 52-week low of $12.26. Its 52-week high presently stands at $15.63. The fund trades at a P/E (ttm) of 13 and it added 2.8% in the last one month. The fund yields about 4.06% annual dividend (as of April 7, 2015).

Original Post