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Global Dividend Hunt With ETFs


The U.S. is still fertile ground for dividend investors, but that does not mean international dividend stocks should be ignored.

As of mid-June, there have been 225 payout increases from S&P 500 members this year and 422 members of the benchmark index that now pay cash dividends, up from 418 at the end of last year, according to S&P Capital IQ. Global dividend payers are getting in on the act as well. [Delightful Dividend ETFs]

Currently, about 75% of the world’s dividends come from outside the U.S., reports Alex Crooke for Investment News. Investment News cites the Henderson Global Dividend Index (HGDI) in noting that global dividends jumped 31.4% in the first quarter.

There is a growing number of exchange traded funds dedicated to developed market dividend payers from which investors can choose.

One of the more venerable options is the $4.3 billion iShares International Select Dividend ETF (IDV) . IDV is backed by a combined 32% allocation to Australia and the U.K., two of the more compelling developed market dividend destinations outside of the U.S. Earlier this month, Goldman Sachs said Australian stocks look inexpensive and said the country’s high payout, which recently flirted with 70% or nearly double the S&P 500, is sustainable.

Australian companies paid $40.3 billion in dividends last year, nearly double the amount paid in 2012. British firms accounted for 11% of global dividends last year, a percentage that only the U.S. beats. IDV has a trailing 12-month yield of 4.56%, which is more than double the 1.8% found on the S&P 500. [The Case for U.K. Dividends]

The PowerShares International Dividend Achievers Portfolio (PID) is another compelling global dividend ETF.

PID, which turns nine years old in September, tracks the NASDAQ International Dividend Achievers Index, which is similar to other dividend achievers indices that benchmark popular U.S.-focused dividend ETFs, such as the PowerShares Dividend Achievers Portfolio (PFM) and the Vanguard Dividend Appreciation ETF (VIG).

However, stocks that find homes in PFM and VIG have dividend increase streaks of at least 10 years. PID requires five consecutive years of higher payouts. That should not be interpreted as PID having looser standards or a hurdle to the fund’s ability to deliver solid returns. [High-Achieving Global Dividend ETF]

In a sign of investors flocking to global dividend stocks this year, PID is the seventh-best PowerShares ETF in terms of 2014 inflows, according to issuer data.

The $1.2 billion ETF has a trailing 12-month yield of 3.11% and in a twist compared other international dividend funds, PID allocates 29.5% of its weight to U.S. companies. The U.K. and Canada combine for another 38%.

A new entrant to global dividend ETF fray is a direct play on rebounding dividend growth in the Eurozone, a region that has lagged other developed markets’ dividend growth over the past several years.