The dividend achievers concept, which in index parlance pertains to companies with dividend increase streaks of at least a decade, is the bedrock of some well-known, U.S.-focused dividend exchange traded funds.
That group includes the PowerShares Dividend Achievers Portfolio (PFM) and the Vanguard Dividend Appreciation ETF (VIG) , the largest U.S. dividend ETF. Dividend achievers can also be found at the international level. In this case, the required dividend increase is five years, the methodology employed by the PowerShares International Dividend Achievers Portfolio (PID) .
Dividends help investors generated greater total return or cushion declines during down markets. Dividends also offer investors a more attractive alternative to fixed-income assets in a stubbornly low interest rate environment. Those sentiments are also applicable to international dividend funds.
PID offers ample exposure to many of the blue-chip laden sectors dividend investors favor when mining for U.S. income stocks. That includes over a third of the ETF’s weight going to the energy sector. That cuts both ways. PID’s energy exposure gives the ETF leverage to a recovery in that beaten up sector, but it also makes the ETF vulnerable in the event of further oil price declines. [Dividend Achievers go Global]
Seven of the ETF’s top 10 holdings are oil or energy-related stocks, including the fund’s largest holding, KazMunaiGas Exploration, Kazakhstan’s state-controlled energy giant. That one holding should not imply PID is risky at the country level. It is not as U.S. and U.K. stocks combine for over 46% of the ETF’s weight with another 13.6% going to Canadian stocks.
Dividends paid around the world grew in impressive fashion last year, rising 11% to $1.167 trillion. In terms of growth, the U.S. led the way with $52 billion in increases.
On a regional basis, North American dividends rose 15% to $392 billion, but U.K. firms once again offered excellent dividend growth. Payouts there surged 31% to $135 billion, according to Henderson Global Investors. [International Dividend ETF Pops]
PID is also attractively valued relative to U.S. stocks with a P/E ratio of just 11.2 compared to about 17 for the S&P 500. The $1.5 billion ETF has a trailing 12-month yield of 2.66%, or 75 basis points above the S&P 500. Home to 87 stocks, PID has an annual expense ratio of 0.54% per year.
PowerShares International Dividend Achievers Portfolio