Single-Country ETFs That Offer Yield
September 12th, 2012 at 1:36pm by Tom Lydon
International equity income has become a popular investment choice for investors in search of yield. Various countries have attractive dividend growth opportunities that are easily accessible with focused exchange traded funds.
“Even with recent talks by the Fed calling for another round of stimulus for the U.S. economy, domestic investors are looking for a place to invest outside of the United States in the hopes of achieving more lucrative returns. These same investors may wish to consider adding dividend-paying stocks to their foreign assets, as this asset class holds major appeal in the current low-rate environment,” Carolyn Pairitz wrote on ETFdb. [European ETFs Recover on Central Bank Hopes]
Overseas equities yield more than U.S. stocks on average, with European equities generating the highest payouts. European countries that are touting the highest yields include Germany, Switzerland and the U.K. All three have yields higher than 4% and stable payout ratios, reports Alec Young of S&P Capital IQ. [ETF Chart of the Day: Switzerland and the Swiss Franc]
Focused European ETFs, rated Marketweight by S&P Capital:
- iShares MSCI United Marketweight Kingdom Index Fund (NYSEArca:EWU) yields 4.48%
- iShares MSCI Germany Index (NYSEArca: EWG) yields 5.22%
- iShares MSCI Switzerland Index Fund (NYSEArca:EWL) yields 5.19%
Developed Asian markets of Hong Kong and Singapore have become stable income plays with yields of 3.4% and 3.8%, respectively. S&P Capital rates the following ETFs Marketweight:
- iShares MSCI Hong Kong Index Fund (NYSEArca:EWH) yields 4.27%
- iShares MSCI Singapore Index Fund (NYSEArca: EWS) yields 2.97%
Emerging markets has become a sector that has healthy dividend growth despite flat share prices. Young reports that the lack of any price appreciation since 2009 makes a strong case for focusing on income within the emerging market countries. [Best Emerging Market ETFs]
Overall, developed and international emerging market stocks have lost stable appreciation since 2009, down 6.1% and 3.9% respectively, S&P Capital wrote in a recent note. However, since many international equities are promising more yield than that of a 10-year Treasury bnote, single country ETFs have just served another use for investors besides diversification.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.