Nifty New Global Dividend ETFs
There are over 170 dividend ETFs in the U.S. and many are thriving.
Despite volatility on the interest rate front that pressured some previously income-generating sectors like consumer staples and utilities, investors have continued to pour cash into some dividend ETFs, particularly the largest dividend ETFs.
Some international dividend ETFs have been solid performers and impressive gathers of assets as well. For example, the iShares International Select Dividend ETF (NYSE: IDV) is up almost nine percent this year and has attracted over $956 million in new assets. IDV is just one example, but amid the spate of new dividend ETFs that have debuted this year are some interest global options. Just look at the following funds.
SPDR S&P Global Dividend ETF (NYSE: WDIV)
WDIV, which debuted in late May, tracks the S&P Global Dividend Aristocrats Index. That is the global equivalent of the index that SDY tracks, but in the case of WDIV its index only includes companies "that have followed a managed-dividends policy of increasing or stable dividends for at least ten consecutive years," according to State Street. Companies in SDY have to dividend increase streaks of at least 25 years.
Although WDIV has just $6.45 million in assets under management, it has returned seven percent since its debut. Investors should note with WDIV "global" does not mean "ex-U.S." as the U.S. is the ETF's largest country weight at almost 18.1 percent. Canada, the U.K., Australia and France round out the new fund's top-five country allocations. Financials, utilities and industrials combine for over 64 percent of WDIV's sector weight.
While dividend increase streaks should not be the lone determining factor in selecting dividend ETFs, many income investors find comfort in knowing companies they are considering investing in consistently boost payouts. That bodes well for WDIV's long-term staying power.
WisdomTree Emerging Markets Dividend Growth Fund (NYSE: DGRE)
The concept of dividend growth is not confined to developed markets. Recent emerging markets dividend growth, which has come with a growing number of dividend ETFs, proves as much. DGRE debuted in early August, but is already off to a decent start with over $15.8 million in AUM.
While the fund aims to capture dividend growth, it does not rely on dividend increase streaks as a way of doing so. Rather, DGRE qualifies as one of a growing number of fundamentally-weighted ETFs that embrace different weighting methodologies. DGRE constituent companies are evaluated on long-term earnings growth expectations, return on equity and return on assets in an effort to find what emerging markets firms will be great dividend payers in the future, not yesterday.
Valuation fans will like this ETF because some of the countries that have the the lowest P/E ratios in the MSCI Emerging Markets Index are well-represented here. That group includes Brazil, Russia, China and Turkey, which combine for more than 37 percent of DGRE's weight.
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Disclosure: Author does not own any of the securities mentioned here.
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