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ETF Showdown: International Dividend Dance-Off

by
August 19, 2011 5:27 pm
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There was a time when dividend stocks and ETFs offered some semblance of shelter from market storms and those days will return. We just don’t know when. No one does, but one positive aspect of the market’s recent woes is that some decent dividend ETFs have gone on sale.

With their newly high yields, two such dividend ETFs square off in this week’s edition of the “ETF Showdown.” Global travelers will like this match-up as we’re taking a look at two international dividend ETFs.

In one corner, weighing in with almost $524.2 million in assets and an expense ratio of 0.45%, we have the SPDR S&P International Dividend ETF (NYSE: DWX). In the other corner, we have the Guggenheim S&P Global Dividend Opportunities Index ETF (NYSE: LVL). LVL sports an expense ratio of 0.6% and $40.2 million in assets under management.

That quick tale of the tape would lead one to believe DWX is the obvious winner. Not so fast, amigo. Both ETFs hold around 100 stocks, give or take a few. DWX features a predictable dividend makeup with a 45% combined allocation to telecom names and utilities. Financials, industrials and consumer discretionary names also receive double-digit weights.

Telecom and utilities offerings account for about 50% of LVL’s weight with financials getting another 22%. No other sector gets double-digit representation in the ETF. Plus, LVL isn’t as international as one would think. The U.S. is the biggest country weight at 23.3%, but the fund offers solid developed markets exposure through decent weights to the U.K. Australia, Israel and Spain.

On the other hand, DWX is all global all the time. There is no allocation to the U.S. in DWX and while Australia and the U.K. combine for 27% of the ETF’s country weights, there is emerging markets exposure through Brazil, Hong Kong, South Africa, Thailand and Turkey, just to name a few.

Overall, LVL offers exposure to 11 countries. DWX nearly triples that with allocations to 28 different countries.

Both DWX and LVL offer sporty yields in the neighborhood of 6%, though LVL slightly bests DWX here. LVL wins in terms of year-to-date performance, though that isn’t saying much as both funds are down on the year.

Both ETFs make for compelling rebound plays, but with superior sector diversity, country exposure and lower fees, DWX wins this showdown.


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