It is not a stretch to say most investors like dividends and few are turned off by the notion of companies reducing their shares outstanding counts. And it is even better when the companies committing to rewarding shareholders are also committing to reducing their debt burdens.
Those are the three factors that are the cornerstones of the Cambria Shareholder Yield ETF (SYLD) , one of the more successful ETFs to launch in 2013. Rising dividends, buybacks and dwindling debt loads are also the backstops for SYLD’s global cousin, the Cambria Foreign Shareholder Yield ETF (FYLD) . FYLD debuted in December 2013. [Cambria Launches Global Shareholder Yield ETF]
While there are numerous international dividend ETFs on the market, FYLD is the first to marry dividends with the reduction of debt and shares outstanding. The strategy has worked. Although FYLD is not old, it has gained 7.5% since its debut and touched a new all-time high Thursday.
FYLD’s fundamental approach ensures the ETF is not overly dependent on dividend increase streaks or excessively allocated to high-yielding stocks, two common traits found among many of the largest U.S. dividend ETFs. [Best of Three Worlds in This ETF]
Although the U.S. is by far the largest dividend market in the world by dollar terms, there are several other credible dividend destinations around the globe, including Canada, Australia and the U.K. Those countries combine for 42% of FYLD’s weight. Last year, British firms paid 11% of all global dividends. [These ETFs Will Soar if the Pound Falls]
Japan ties with Canada as FYLD’s largest country weight at 18%. Although Japan is not known for being a developed market dividend darling on par with the U.S., U.K. or Australia, Japanese companies are voracious repurchasers of their own shares.
Last year, Japanese companies bought back more of their own stock than in any time since 2005, underscoring Japan’s status as the largest country weight in FYLD and the PowerShares International BuyBack Achievers Portfolio (IPKW) .
Top sector allocations include 23% to industrials, 18% to financial services and 14% to consumer discretionary.
FYLD, which charges 0.59% per year and pays its dividends quarterly, has outpaced several of the major EAFE ETFs this year.
FYLD Asset Allocation
Chart Courtesy: Cambria Funds