For its part, China is now the largest emerging markets dividend payer in dollar terms while Brazil, despite myriad economic challenges, is expected to deliver sturdy dividend growth. [An EM ETF With a Buffer]
Risks remain for income investors looking to tap emerging markets. For example, emerging markets companies pay their dividends in local currencies, but ETFs such as EDIV deliver payouts in U.S. dollars. So if the dollar remains strong against emerging currencies, investors could see some of their income pinched.
Although the South African rand and Brazilian real have traded lower against the U.S. dollar since May 2013, dividend growth in those countries has still been positive in dollar terms. However, Russia, Chile, Indonesia, Turkey and Thailand have recently negative dividend growth when factoring in dollar strength. Those countries combine for 18.3% of EDIV’s weight.
SPDR S&P Emerging Markets Dividend ETF
