Investors may also gain exposure to the Down Under through ETFs that come with high dividends. The IndexIQ Australia Small Cap ETF (NYSEArca: KROO) has a 12-month yield of 6.97% and iShares MSCI New Zealand Investable Market Index Fund ETF (NYSEArca: ENZL) has a 12-month yield of 5.98%.
Australia’s abundant commodity reserves have helped drive its equities markets. The recent rebound in Australian stocks is most noticeable in small-cap stocks. For instance, KROO has gained 19.1% year-to-date as of March 1st, whereas the iShares MSCI Australia Index ETF (NYSEArca: EWA), which has a 12-month yield of 4.51%, is up 10.8% year-to-date. New Zealand is also attracting greater interest as a safe and stable investment locale, ranking among the best investable countries in terms of protectionism and absence of venality. Additionally, New Zealand enjoys close ties to both Australia and China, two of its largest trading partners.
Sector ETFs
The emerging markets are also making a quick rebound as the global economy recovers. One way to gain access to the high performance of the emerging markets, coupled with high dividend yields, is through their financial sector. The global financial system is overflowing with liquidity, low rates and cheap loans to banks. With global central banks hand holding the international banking system, international financials seem to be in a favorable position. The iShares MSCI Emerging Markets Financials Sector Index Fund (NYSEArca: EMFN) has a 12-month yield of 5.96%. Additionally, the SPDR S&P International Financial Sector ETF (NYSEArca: IPF) provides a more diversified approach to the international financials sector and offers a 12-month yield of 3.97%.
The nuclear sector is coming off the natural disaster in Japan last year that left another permanent mark on the industry. Nevertheless, countries are acknowledging the need to expand and develop the next stage in our energy future. World governments are committing to invest in nuclear technology, which has helped lift the Market Vectors Nuclear Energy ETF (NYSEArca: NLR). Along with the fund’s better performance, it also offers a hefty 12-month yield of 11.29%.
Defensive sector plays have fallen out of favor as world economies recover and riskier equities gain greater traction. But the SPDR S&P International Telecommunications Sector ETF (NYSEArca: IST) provides exposure to companies with a stable customer base, which help generate strong cash flows to support dividend yields. The fund has a 12-month yield of 3.97%.
While still very vulnerable to the dropping prices on solar panels, concerns over fossil-fuel prices, increasing energy demand and global warming will increase demand for renewable resources. The solar energy sector is coming off a poor 2011 performance after the U.S. debt levels put government subsidies in the solar sector into question. Still, the Market Vectors Solar Energy ETF (NYSEArca: KWT) offers a nice 12-month yield of 5.39% for those who believe in the continued advancements in solar technology.
With investors focusing on dividend plays, it is important to not get tunnel visioned or become too confined to a specific set of income producers. There are many dividend-generating ETF opportunities out there. Investors just need to look beyond the conventional bond- and dividend-focused funds.