18 Highest Dividend Yield Country ETFs

by: Hao Jin, CFA

The VIX has been in a downtrend since last November, which would point to declining volatility. The S&P 500 (NYSEARCA:SPY) is above 200-day moving averages, which is widely regarded as bullish. The TED spread, a difference between the interest rates on interbank loans and on T-bills, is decreasing, which indicates improving of credit in the general economy.

More and more investors have gone overseas to diversify their portfolios and boost their performance. With single-country ETFs dedicated to many developed and emerging markets, accessing different country markets around the globe has become much easier.

Country ETFs with High Yields

Followings are 18 country ETFs from iShares with the highest dividend yields:

Fund Name (Ticker) Yield P/E
iShares MSCI Spain (NYSEARCA:EWP) 9.7% 12
iShares MSCI New Zealand (NYSEARCA:ENZL) 6.5% 20
iShares MSCI Poland (NYSEARCA:EPOL) 5.7% 11
iShares MSCI Belgium (NYSEARCA:EWK) 5.3% 21
iShares MSCI Australia (NYSEARCA:EWA) 5.1% 14
iShares MSCI Italy (NYSEARCA:EWI) 4.6% 13
iShares MSCI Malaysia (NYSEARCA:EWM) 4.4% 19
iShares MSCI Singapore (NYSEARCA:EWS) 4.3% 12
iShares MSCI Austria (NYSEARCA:EWO) 4.2% 17
iShares MSCI Sweden (NYSEARCA:EWD) 4.1% 14
iShares MSCI Taiwan (NYSEARCA:EWT) 4.0% 15
iShares MSCI Germany (NYSEARCA:EWG) 3.5% 15
iShares MSCI Israel (NYSEARCA:EIS) 3.5% 15
iShares MSCI France (NYSEARCA:EWQ) 3.4% 13
iShares MSCI United Kingdom (NYSEARCA:EWU) 3.3% 13
iShares MSCI Netherlands (NYSEARCA:EWN) 3.2% 13
iShares MSCI South Africa (NYSEARCA:EZA) 3.1% 17
iShares MSCI Turkey (NYSEARCA:TUR) 2.8% 13

Many of these ETFs have the biggest allocations in financials, energy and materials sectors. MSCI Taiwan has about half of its holdings in tech stocks. Most of these high-yield country ETFs are from European countries. With high-dividend yields and low P/Es, MSCI Singapore and MSCI Australia are two non-European ETFs that appear attractive.

MSCI Singapore

Singapore's economy depends heavily on exports. The graph below from TradingEconomics.com shows that Singapore's GDP growth was very volatile: from 2007 until 2011, Singapore's average quarterly GDP Growth was 6%, reaching a historical high of 39.9% in March of 2010, and a record low of -16.7% in September of 2010.

(Click chart to expand)

The Government Debt in Singapore is 97% of the country´s GDP. A report released on December 8, 2011, by Monetary Authority of Singapore, projects that Singapore's economic growth in the 2012 will be between 1% to 3%, and inflation between 2.5% to 3.5%.

MSCI Australia

Australia has abundance of agricultural and mineral resources. According to TradingEconomics.com, from 1959 until 2011 Australia's average quarterly GDP Growth was 0.89%, reaching a historical high of 4.6% in March of 1976, and a record low of -2.7% in June of 1974 . The Government Debt in Australia is 22% of GDP. From 1989 until 2010, Australia's average Government Debt to GDP was 20%.


One of the arguments made at the time for investing in the Internet bubble was that traditional valuations such as P/E and price-to-sales ratios no longer matter. In the case of the coming boom, when you start hearing financial commentators and pundits creating new valuation metrics to support current share prices across gold, oil, agriculture and the market as a whole, that will be a signal that the boom is coming to an end, according to Robert Haber, author of "Go Canada."

Many natural wealth country ETFs such as MSCI Australia offer steady high dividends. In this low-interest environment. They could be great alternatives for income investors searching for yields.

Data sourced from Yahoo Finance, iShares and TradingEconomics.com and valid as of January 22, 2012.

Disclosure: I am long EWA.