Emerging Market Dividend ETFs for Yield

ETF Trends

For the month of August, about $34 billion in dividends was paid out to investors, confirming the trend of the search for yield. Emerging market exchange traded funds have paid out a large portion of income to investors, and will be increasing payouts going forward.

“ING IM recently said Western investors need to start taking notice of the emerging markets dividend story because dividend growth in the developing world is supported by low levels of corporate debt and high levels of profitability,” The ETF Professor wrote for Benzinga.

Furthermore, a recent UBS report cited that the 300 largest non-financial firms in the MSCI Emerging Markets Index are expected to pay $52.2 billion in dividends this year, up from $48.9 billion last year, according to Financial Times research. [Emerging Market Dividend ETFs Grab Market Share]

The latest news from the U.S. Federal Reserve confirmed that the current low interest rate environment will continue. Jonathon Yates for Emerging Money reports that Federal Reserve Chairman Ben Bernanke did not give financial markets the boost many Fed watchers were hoping for, but he did highlight the appeal of dividend-paying emerging market ETFs. [Dividend ETF's Strategy Paying Off in Emerging Markets]

Many of the following ETFs have a higher yield than the 2% for the S&P 500. Plus, despite the marked slowdown in countries such as China and India, many emerging market funds with a dividend focus are performing well in 2012:

  • WisdomTree Emerging Markets Equity Income Fund (DEM)  yields 3.96%
  • WisdomTree Emerging Markets Small Cap Dividend Fund (DGS)  yields 3.24%
  • SPDR S&P Emerging Markets Dividend Fund (EDIV)  yields 5.38%

WisdomTree Emerging Markets Equity Income Fund

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Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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