Does State Street's New Int'l Dividend ETF Offer Anything New?

Feb. 25, 2008 5:26 AM ETDWX, DTH, DEW
Gary Gordon profile picture
Gary Gordon

With worldwide markets trading in a relatively tight range for about a month, State Street's introduction of the SPDR S&P International Dividend ETF (DWX) seems timely; that is, when you can't get appreciation, you might as well get some yield.

I even "buy" the PR from Anthony Rochte, senior managing director at State Street. He recently commented that the launch of DWX is a response to client demand for competitive dividend opportunities from strong foreign companies.

According to State Street, the index that DWX tracks yielded 7.6% per year as of 12/31/07. (With the January/February global sell-off, that yield might be closer to 8% right now.) And in case one had doubts about the companies in this index, it can be noted that each of the 100 included companies had to have 5 years of profitability and earnings growth.

If we assume foreign stocks came up flat over the next 12 months, one would still get a quarterly 2% income stream from the DWX. Not too shabby for participating in the equity markets.

Before getting too excited, however, we should note that State Street is reasonably late to the international, high-yield dividend party. The WisdomTree Europe High-Yielding Equity Index Fund (DEW) has similar criteria for company inclusion as well as similar country representation. The same might be said for the WisdomTree DEFA High-Yielding Equity Fund Index Fund (DTH), which brings some Asia-Pacific into the picture as well.

DEW has a 5.2% yield that is paid annually in December, while DTH has a 5.6% yield that is paid annually in December. Both have a .58% expense ratio.

Herein lies an opportunity for the new DWX. Not only is it less expensive at .45%, it also intends to pay out a higher annual yield (7.6%) on a quarterly basis. And right now, investors feel much better about a regular income stream than a buy-n-hold-n-wait for the year-end bonus.

The catch? The early volume on DWX is rather paltry. Low volume could lead to poor price execution on the buy and/or the sell side. What's more, State Street could pull a "Claymore" and remove the investment from trading down the road. That action could have unintended tax consequences.

Nevertheless, I am going to keep an eye on SPDR S&P International Dividend ETF (DWX). Its 25% weighting in financials is not that high relative to other dividend funds.

This article was written by

Gary Gordon profile picture
Gary A. Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. He has 30 years of experience as a personal coach in “money matters,” including risk assessment, small business development and portfolio management. He favors tactical asset allocation strategies over "set-it-and-forget-it" investing.Gary is often asked to consult as an educator. He has taught financial concepts in Mexico, Singapore, Hong Kong, Taiwan and the United States.As a Certified Financial Planner (CFP), Gary has distinguished himself as a reputable and trusted investor advocate. Gary’s participation on local and national radio has spanned more than two decades. He writes commentary at his web log,

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