Market Overview

S&P: Dividends to Drive Global Equity Returns (IDV, DWM, DWX)


Following a strong start to 2012 for global stocks and the ETFs that track them, dividends are likely to make up a larger part of total returns through year end, according to a research note published by S&P Capital IQ.

"Hhigher valuations and signs that growth is slowing from Brazil to China to beleaguered Europe drive our more cautious international views today compared to our more bullish stance in December, before the surge," according to S&P Capital IQ's Alec Young.

Fortunately, there are plenty of ETFs offering global exposure with dividend yields exceeding 4% and S&P highlights three of them in the note. Those funds are the iShares Dow Jones International Select Dividend Index Fund (NYSE: IDV), the SPDR S&P International Dividend ETF (NYSE: DWX) and the WisdomTree DEFA ETF (NYSE: DWM), all of which are rated Marketweight by S&P.

With over $912 million in assets under management, the iShares Dow Jones International Select Dividend Index Fund is largest of the trio and the fund currently sports a trailing 12-month yield of almost 5%. While Australia and the U.K. combine for over 34% of IDV's weight, the ETF is also heavily allocated to Euro Zone nations as four of those countries combine for about 23% of the ETF's weight.

The SPDR S&P International Dividend ETF currently yields an impressive 6.5% and has almost $816 million in assets under management. With an expense ratio of 0.45%, DWX is cheaper than IDV, which charges 0.5%. DWX's country allocation is also led by the U.K. and Australia, but the ETF is also heavier on Euro Zone nations as seven of those countries combine for roughly 41% of the fund's weight. DWX also offers more emerging markets exposure than its iShares rival.

The WisdomTree DEFA ETF is also cheaper than IDV with fees of 0.48% and DWM currently yields around 4.2%. The fund offers exposure to 20 countries, but approximately 57% of that country weight is devoted to the U.K. Japan, Australia and France. Including France, DWM allocates portions of its weight to nine Euro Zone nations.

S&P also has Marketweight ratings on the Vanguard MSCI Europe ETF (NYSE: VGK) and the iShares MSCI EAFE Value Index Fund (NYSE: EFV).

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Posted-In: Analyst Color Long Ideas News Short Ideas Dividends Dividends Specialty ETFs Emerging Market ETFs


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