However, it cannot be glossed over that DEM’s roughly 35% combined allocation to Russia and China makes senses because 1) This is a dividend ETF and 2) In addition to China being the largest emerging markets dividend payer in dollar terms, Russia is the fastest-growing. Plus, those are two of the least expensive emerging markets. [Russia Asserts Dividend Dominance]
Gazprom and Lukoil, two of DEM’s top-10 holdings, are expected to pay at least 15% of this year’s profits in dividends.
Getting back to China, the country’s utilities and consumer staples sectors produced dividend growth that investors have come to expect from those sectors in the U.S. Those sectors China delivered dividend growth of 42.1% and 14.6%, respectively, according to WisdomTree data. Those sectors combine for almost 9% of DEM’s weight.
“The broad-based dividend growth across size capitalization and among a majority of sectors is a positive starting point for a potential turnaround, and the price-versus-valuation divergence presents an interesting investment opportunity,” said Zimmerman.
WisdomTree Emerging Markets Equity Income Fund
Tom Lydon’s clients own shares of DEM.