ETF Spotlight: First Trust DJ Global Select Dividend (FGD)
January 5th at 2:00pm by Tom Lydon
ETF Spotlight on First Trust DJ Global Select Dividend (NYSEArca: FGD), part of a weekly series.
Assets: $59.8 million
Objective: Tracks the Dow Jones Global Select Dividend Index, an index of 100 developed-market stocks
Holdings: Top holdings include companies like Deutsche Telecom, Canadian Oil Sands, HMV Group and France Telecom.
What You Should Know
- To be considered for inclusion in the index, companies must pay a current dividend, have a current-year dividend-per-share ratio greater than or equal to its five-year average, have a five-year average payout ratio of less than or equal to 60% for European and U.S. companies and 80% for all others and have a minimum three month daily average trading volume of $3 million
- Stocks included are then weighted by their dividend yield
- North America, Europe and Asia make up the bulk of this fund: Australia is 19%, the United States is 16.9%, the United Kingdom is 12.2% and Canada is 10.1%; France, Hong Kong, Italy, Singapore and others appear in smaller amounts
- The top sectors are utilities, 19.1%; telecom, 17.2%; industrials, 15.6%; and financials, 13.9%
- Rebalancing occurs once a year, in December
The Latest News
- FGD currently yields 3.62%
- In the absence of decent Treasury yields, anything that yielded a dividend was highly sought after by investors in 2010
- Treasury yields have come back somewhat, but only the 30-year is yielding better than FCG at 4.54%
- The case for dividends is a strong one right now: After getting beaten up over the last couple years, dividend ETFs present investors with an opportunity to earn some extra yield
- Although the average dividend yield on the S&P is 2.4% and the yield on 10-year Treasuries is 3.46%, dividend stocks come with potential price appreciation and/or dividend hikes, says Consumer Affairs.
