Emerging markets dividend growth has outpaced developed world payout growth over the past decade and market observers expect that trend to continue, but some advisors and investors gloss over emerging markets dividend exchange traded funds.
The SPDR S&P Emerging Markets Dividend ETF (NYSEArca: EDIV) is one of those ETFs, though EDIV is home to $423.1 million in assets under management, so calling the four year old fund small is inaccurate. With emerging markets stocks showing signs that their long period of lagging their developed market counterparts could be ending, revisiting the idea of compensation with developing world equities is warranted.
EDIV has traded slightly lower this year while the benchmark MSCI Emerging Markets Index has traded higher. In EDIV’s favor, the ETF has surged 5.7% since March 10, a performance that has been accrued in the face of troubling dividend news from Chinese banks. [An Emerging Markets ETF With a Dividend Kicker]
EDIV’s recent bullishness has been accrued against the backdrop of dividend cuts from Chinese banks. Amid rising bad debt, three of China’s four largest banks last week announced payout cuts with one, China Citic Bank Corp., scrapping its dividend altogether, according to Bloomberg.
China is EDIV’s third-largest country weight at almost 14% while finanicals are the ETF’s largest sector allocation at over 25%. In recent years, China has become the largest emerging markets dividend payer in dollar terms, a perch reached in large part due to banks’ dividend growth. [China’s Dividend Growth Story]