As investors widen their searches for income, international dividend exchange traded funds are gaining increased attention.
Several global dividend ETFs have impressed this year, but one of the group’s real standouts is the PowerShares International Dividend Achievers Portfolio (PID).
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) . [Dividend Achievers Indices Achiever for Investors]
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.
PID hit a new 52-week high Thursday and is higher by about 5% this year. That compares with a 3.3% gain for the S&P 500 and just 2% for VIG. [Go Global With Dividend Achievers]
An oft-cited advantage of international dividend stocks over their U.S. counterparts is higher yields. PID delivers on that front with a trailing 12-month yield of 3.38% or nearly 150 basis above the dividend yield on VIG.
Important to the investor that wants to maintain some U.S. exposure, U.S. stocks are PID’s largest country weight at nearly 30%. While the ETF surprisingly features no exposure to Australia, one of the highest-yielding developed markets, the fund’s other international weights indicate it has legitimate dividend growth potential.
For example, the U.K, is PID’s third-largest country weight . “British listed companies paid $102. 1 billion in dividends last year, and since 2009 have paid roughly $441 billion,” according to the Independent.
PID’s two largest emerging markets exposures are China and Russia. China is the largest emerging markets dividend payer in dollar terms while Russia is one of the fastest-growing developing world dividend destinations because of government policy that is actively attempting to force cash-rich companies there to pay bigger dividends. [China's Dividend Growth]
With a P/E ratio of 14.1, PID is discounted relative to the S&P 500 and some broader European ETFs. Investors are awakening to PID’s story. The ETF has hauled in almost $196 million of its $1.1 billion in assets over the past year.
PowerShares International Dividend Achievers Portfolio