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Bet on 4 Global ETFs to Earn at Least 4% Yield

Sanghamitra Saha

With mixed U.S. economic data and political uncertainty, prospects of the third interest rate hike of this year has lost some steam lately. Fed chief Yellen’s testimony also came in dovish. Yellen indicated that since the neutral rate – at which economic growth matches its potential and inflation – “is currently quite low by historical standards, the federal funds would not have to rise all that much further to get to a neutral policy stance" (read: Dovish Yellen Testimony to Boost These ETFs).

Plus, President Donald Trump’s first major legislative move to overhaul the country’s healthcare system was recently abandoned in the Senate. The failure of the bill in the Senate stirred concerns over Trump’s ability to deliver on other pro-growth agenda including tax cuts, deregulation and infrastructure spending (read: ETFs to Buy/Avoid After Healthcare Bill Failure).

This has pushed the Treasury yields down to around 2.27% from this month’s high 2.39%. On the other hand, the U.S. dollar has also remained weak this year, making international equity investing more popular. Notably, iShares MSCI ACWI ETF ACWI, which targets the global stock market, has surged 13.5% this year while SPDR S&P 500 ETF SPY (SPY) is up 10.5% (as of July 19, 2017).

This is especially true, as a lot of money has been flowing into international markets thanks to the rebound in those economies. Moreover, markets are speculating the European Central Bank’s (ECB) possible announcement of a QE wind down as soon as in early September. This has pushed up yields on German bunds (read: ECB to Wind Up QE Soon? ETFs in Focus).

Against this backdrop, investors in search of higher income and benchmark-beating yields may be driven to global stocks. After all, dividend-focused products offer the best of both the worlds – safety in the form of payouts and stability in the form of mature companies that are less volatile to the large swings in stock prices. High dividend payouts actually protect securities to a large extent in case of capital losses. 

Below we highlight five global dividend ETFs for investors seeking yields. All these funds yield 5% or more, making them excellent choices for yield-hungry investors.

Global X SuperDividend ETF SDIV Annual Yield: 6.59%
This ETF provides exposure to about 100 high yield stocks from around the world with each holding less than 1.64% of assets each. REIT and m-REITs take the top spot at 50%.
From a country look, about one-third of the portfolio is allocated to America. The product has amassed $948.9 million in its asset base. Expense ratio comes in at 0.58%. 

SPDR S&P International Dividend ETF DWX – Annual Yield 5.08%

The fund has a double-digit exposure to financials (18.96%), real estate (15.75%), utilities (14.66%) and industrials (11.38%). Australia takes the top spot in the fund (15.85%) followed by Canada (10.6%) and the U.K. (10.3%). The fund charges about 45 bps in fees.

iShares International Select Dividend ETF IDV – Annual Yield 4.16%

The fund has heavy exposure to the U.K. (23.5%), Australia (16.8%) and France (10.4%). The ETF has nearly 31.5% of its assets in financials, and then about 11.8% in utilities, around 10.7% in energy and 10.2% in Telecom stocks. IDV charges 50 bps in fees.

Guggenheim S&P Global Dividend Opportunities Index ETF LVL Annual Yield: 4.06%

This ETF focuses on high yielding securities from around the world. As many as 109 securities are chosen for inclusion, with heavy exposure to the financials, consumer staples and real estate securities. American stocks account for roughly 25% of total assets followed by Switzerland (15.69%) and Australia (12.39%). The fund charges 64 bps in fees.

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SPDR-SP 500 TR (SPY): ETF Research Reports
ISHRS-MSCI ACWI (ACWI): ETF Research Reports
GLBL-X SUPERDIV (SDIV): ETF Research Reports
SPDR-SP INT DIV (DWX): ETF Research Reports
GUGG-SP GLBL DV (LVL): ETF Research Reports
ISHARS-INTL SD (IDV): ETF Research Reports
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Zacks Investment Research
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