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An Asia-Pacific Dividend ETF with Attractive Yields

Asia-Pacific country stocks and related exchange traded funds provide attractive yields and bolster an investor’s income-focused portfolio.

For example, the iShares Asia/Pacific Dividend ETF (DVYA) has a 12-mont yield of 5.63%. In comparison, the S&P 500 has a dividend yield of 2.37%.

The iShares Asia/Pacific Dividend ETF tracks high dividend paying stocks from Asia/Pacific, developed economies. Specifically, the ETF includes Australia 54.1%, Hong Kong 15.7%, New Zealand 10.5%, Singapore 10.1% and Japan 8.6%.

The Australian market has been a dividend-generating powerhouse. Compared to companies in other developed economies, Australian firms typically pay out higher yields. According to Morningstar analyst Patricia Oey, Australia’s higher-yielding defensive sectors and bank stocks have also recently raised their dividend payout ratios. [Australia With Dividends]

“While Australia looks to be the most expensive market in the world on P/E ratios, it is the cheapest on dividend yields,” Credit Suisse equity strategist Hasan Tevfik said in a note, reports Vesna Poljak for The Sydney Morning Herald. “As long as bond yields remain low, Australian equities are well positioned to further benefit from the global-search-for-yield.” [Quality Global Dividends]

Tevfik argues that Australia could generate raise dividends further as Australian companies’ free cash-flow margin in the market is expected to rise to 8.4 per cent in 2014 from 1.5 per cent in June 2013. “Free cash generation is an obvious early indicator of a company’s ability to return capital to investors,” Tevfik said.

The ETF’s top sectors include financials 24.7%, telecom services 20.7%, industrials 19.2% and consumer staples 18.7%. Top holdings include Telecom Corp of New Zealand 6.1%, Monadelphous Group 5.3% and David Jones 4.8%.

DVYA has also been outperforming the U.S. markets. The ETFis up 4.5% over the past week and has gained 5.7% year-to-date, whereas the S&P 500 has dipped 0.9% over the past week and rose 1.9% so far this year.

The iShares ETF has an annual expense ratio of 0.49%.

iShares Asia/Pacific Dividend ETF

For more information on dividends, visit our dividend ETFs category.