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A New ETF For International Dividend Growth

May 20, 2016 1:24 pm
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Dividend growth, as it should be, is a point of emphasis for seasoned income investors. Plenty of issuers of exchange traded funds have met that demand with a batch of US-focused dividend growth ETFs. Some issuers are also taking the dividend growth approach to international ETFs.


BlackRock Inc.'s (NYSE: BLK) iShares unit, the world's largest ETF issuer, added to the choices among international dividend growth ETFs Thursday with the debut of the iShares International Dividend Growth ETF (BATS: IGRO).


The iShares International Dividend Growth ETF follows the Morningstar Global ex-US Dividend Growth Index. That benchmark represents 97 percent of ex-U.S. market capitalization, including developed and emerging markets. The index screens for at least five years of uninterrupted dividend growth while screening for companies with the ability to continue raising payouts, according to Morningstar


Nearly half of the world's dividends are paid by ex-U.S. companies. Not only does IGRO offer exposure to that theme, but it offers investors exposure to some of the steadiest international dividend markets. For example, the U.K. and Switzerland combine for over a third of the new ETF's weight while Canadian stocks check in at over 12 percent. 


Japan is IGRO's fourth-largest country weight at 10 percent, which makes sense because the historically low-yielding market has been boosting dividends and share repurchases in recent years. 


IGRO is home to 343 holdings. The new ETF caps holdings at a weigh of three percent when the fund is rebalanced. IGRO's underlying index requires “that companies have positive earnings forecast

and have earnings paid out as dividends that are less than 75%,” according to iShares.


IGRO's emerging markets exposure is relatively light as China, India and South Africa combine for about five percent of the new ETF's weight.


IGRO charges 0.22 percent a year, or $22 per $10,000 invested.

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