The search for income has gone overseas, as investors are finding opportunity in economies that have lower valuations than those in the U.S.
Focused stocks and ETFs often have higher yields than those found in the U.S. [Best ETFs for Income and Dividends]
“The typical arguments for dividend investing also apply to the emerging markets. Dividends are the largest contributors to total return for investors over the long term and can also signal effective management and healthy fundamentals,” Patricia Oey for Morningstar wrote. “In the near and medium term, we expect emerging markets to show stronger earnings growth, as well as faster dividend growth, relative to the developed world. ”
In total, assets from mutual funds and ETFs that present income from a global mix including U.S. stocks have doubled in assets since 2009 to $12.1 billion, according to Lipper data.
Fund performance from this sector has been so outstanding that Lipper Data added two new categories to help track assets: international equity-income funds, which invest more than 75% of their holdings outside the U.S., and global equity-income funds, which invest more than 25% but less than 75% of their holdings outside the U.S., reports Steve Rosenbluth for The WSJ. [Top International ETFs for Dividends]