International Dividend ETFs List
(click on symbol for data and articles)
Barclays iShares ETFs
iShares Dow Jones EPAC Select Dividend Index Fund (BATS:IDV)
Claymore/Zacks International Yield Hog Index ETF (NYSE:HGI)
PowerShares International Dividend Achievers Portfolio (NASDAQ:PID)
WisdomTree DEFA Fund (NYSEARCA:DWM)
WisdomTree DEFA High-Yielding Equity Fund (NYSEARCA:DTH)
WisdomTree Emerging Markets High-Yielding Fund (NYSEARCA:DEM)
WisdomTree International LargeCap Dividend Fund (NYSEARCA:DOL)
WisdomTree International MidCap Dividend Fund (NYSEARCA:DIM)
WisdomTree International SmallCap Dividend Fund (NYSEARCA:DLS)
WisdomTree International Dividend Top 100 Fund (NYSEARCA:DOO)
WisdomTree Europe Total Dividend Fund (DEB)
WisdomTree Europe SmallCap Dividend Fund (NYSEARCA:DFE)
WisdomTree Europe High-Yielding Equity Fund (NYSEARCA:DEW)
WisdomTree Pacific ex-Japan Total Dividend Fund (DND)
WisdomTree Pacific ex-Japan High-Yielding Equity Fund (DNH)
WisdomTree Japan Total Dividend Fund (NYSEARCA:DXJ)
WisdomTree Japan High-Yielding Equity Fund (NYSEARCA:DNL)
WisdomTree Japan SmallCap Dividend Fund (NYSEARCA:DFJ)
What Are They?
- Dividend ETFs track indexes in which stocks are weighted by their dividend payments. Some of these ETFs also take account of the dividend yield (the percentage of the stock's market cap paid out as a dividend each year), whether the dividend has been sustained or risen over time, and for how long the stock has paid a dividend.
- Dividend ETFs cover broad indexes, US and foreign stocks, and individual sectors. International dividend ETFs are those that pick the dividend paying stocks from the broad foreign indexes, and cover multiple sectors in a single ETF.
Why & How To Use Them
- Proponents of dividend-paying stocks argue that they have outperformed the broad market in the long-term (see Further Reading below). Income-oriented investors, for example those in retirement, may also want to raise the income yield of their portfolios.
- International stocks are a separate asset class from US stocks (despite the fact that over the last few years their performance has become increasingly correlated with US stocks). Adding international stocks to a portfolio should therefore lower volatility and raise long run returns, particularly if the portfolio is periodically rebalanced.
- If you accept the case for dividend-paying stocks, there are two ways to use these ETFs: (1) Build a portfolio entirely from dividend-paying stocks, for example using the WisdomTree ETFs. (2) Construct a portfolio tilted to dividend-paying stocks by adding one or more of these ETFs to a portfolio of broad index ETFs.
What to Look Out For
- Compared to broader index ETFs, international dividend-paying ETFs tend to have higher expense ratios and wider buy-sell spreads (which makes them more costly to buy and sell). Since the higher fees come out of the dividends paid, that reduces some of the extra yield.
- While dividend-paying stocks have a good track record, the theoretical case for them is controversial. All else being equal, dividend-paying stocks should be less desirable than stocks of companies that buy back stock if the investor pays the same taxes on dividends as on long term capital gains.
- Articles on specific ETFs in this list: WisdomTree's Emerging Markets ETF Stacks Up Nicely Against iShares' Equivalent (Matt Hougan), New ETF Dow Jones EPAC Select Dividend Index Fund [IDV]: Worth a Gander (Roger Nusbaum), Dividend ETFs: Three Models, Eight Options, Two Standouts (Market Participant), Dollar-Cost Averaging Into The International Dividend ETF (Alligator Investor), Claymore's New Country Rotation and International Yield Hog ETFs (Roger Nusbaum), PowerShares International Dividend Achievers: A Solid Portfolio Component (Market Participant), Claymore's New Rotation and Dividend ETFs: A One-Stop Approach To Country Investing and Income Growth (Matt Hougan).
- The case for dividend-paying stocks is outlined in this interview with Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management. It also contains useful discussion of WisdomTree's ETFs.
- The case against dividend-paying stocks is outlined in Why Dividend Paying Stocks are a Mistake (David Jackson), and an argument for using a small cluster of individual stocks instead of ETFs is made in High Dividend ETFs: Who Needs 'Em? (Geoff Considine).
- Accounting for Leverage with High Dividend Strategies discusses construction and evaluation of income generating portfolios.
- Dividend-weighted ETFs include: Broad US Dividend ETFs, International Dividend ETFs and US Market Cap/Dividend ETFs.
This page is part of The Seeking Alpha ETF Selector which sorts ETFs by type, highlights how to use them and what to look out for, and provides links to articles that discuss key issues for investors.