“From a debt standpoint, they’re in much better shape than developed markets like the U.S. and Europe,” Lydon tells Matt Nesto. Emerging market ETFs are paying dividends that are “very competitive” with what U.S. companies are dishing out to investors, he adds.
Emerging market companies are “making a lot of money and kicking off some pretty good dividends too,” Lydon notes.
Ten years ago, developing market ETFs such as iShares MSCI Emerging Markets (NYSEArca: EEM) used to be the place “for your speculative money,” but Lydon says that has changed. “If you can get … in some cases 6% dividend yield while you’re waiting for global markets to get traction; not a bad yield.”
He also points to two emerging market ETFs that specialize in dividend stocks: Wisdom Tree Emerging Markets Equity Income (NYSEArca: DEM) and SPDR S&P Emerging Markets Dividend fund (NYSEArca: EDIV). [How to Chose the Right Dividend ETF for Emerging Markets]
Watch the Breakout video to see the full interview.
Full disclosure: Tom Lydon’s clients own EEM.