The Case for U.K. Dividends

ETF Trends

For the first time, global dividends topped $1 trillion ($1.03 trillion to be precise) last year. U.S. stocks were big factors in that equation with S&P 500 payouts soaring to record of nearly $312 billion.

While the U.S. deserves accolades for dividend growth, it is not the only developed market making its payout presence felt. British dividend stocks deserve plenty of attention as well. “British listed companies paid $102. 1 billion in dividends last year, and since 2009 have paid roughly $441 billion,” according to the Independent.

The Independent goes on to note British firms accounted for 11% of global dividends last year, a percentage that only the U.S. beats. Several U.S.-listed exchange traded funds provide access to some of the U.K.’s most notable dividend payers, an important fact as Royal Dutch Shell (RDS-A), HSBC (HSBC) and Vodafone (VOD) are among the top-10 dividend payers in the world in dollar terms. [A Spot of Tea With U.K. Dividends]

Those stocks combine for over 18% of the iShares MSCI United Kingdom ETF’s (EWU) weight. BP (BP) and GlaxoSmithKline (GSK) rank among the top-20 global dividend payers, according to the Independent. Those two stocks combine for 10% of EWU’s weight, helping the ETF to a trailing 12-month yield of 2.35%, or more than 50 basis points above the S&P 500, according to iShares data.

U.K. dividends and ETFs such as EWU, the WisdomTree United Kingdom Hedged Equity Fund (DXPS) and the db X-Trackers MSCI United Kingdom Hedged Equity Fund (DBUK) , have some other potential payout catalysts to consider.

For example, Australian mining companies are expected to be among that country’s leading dividend growers this year. That includes BHP Billiton (BHP) and Rio Tinto (RIO). Those stocks combine for 5.6% of EWU’s weight and over 7% of DXPS. [A Look at Australian Dividends]

Additionally, European banks are expected to join their U.S. counterparts in bolstering payouts this year with some of the most robust non-Eurozone bank dividend forecast to come from the U.K. EWU allocates almost 22% of its weight to the financial services sector while DXPS devotes 17% to that sector. [Banking on European Banks]

Do not forget DBUK. HSBC, Shell, BP, GlaxoSmithKline an Vodafone combine for almost 30% of the ETF’s weight. Financials are over 23% of DBUK’s weight. DBUK, like DXPS, is a currency hedged product, meaning the two ETFs could get a lift if the pound declines against the dollar.

iShares MSCI United Kingdom ETF

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EWU

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