DeAWM’s international dividend ETFs provide attractive yields – the high-dividend-yield indices select companies with dividend yields greater than or equal to 1.3 times the yield of the parent index and screen for quality, including return on equity, earnings variability and debt-to-equity. Additionally, the new funds also utilize forward currency contracts to diminish the negative effects of an appreciating U.S. dollar or weakening foreign currencies over the short-term – weaker foreign currencies mean a non-hedged position would generate a lower U.S. dollar-denominated return. [Global Dividend ETFs That Help Diminish Currency Risks]
“We are only a few years into a cyclical U.S. dollar bull market with such cycles historically lasting an average of eight years,” according to DeAWM. “With the U.S. Federal Reserve Board (Fed) liable to increase the federal funds rate in the near-term and the U.S. economy accelerating at a faster rate than many other developed markets, there is a case for U.S. dollar tailwinds. Indeed, Deutsche Bank’s FX strategists are forecasting the U.S. dollar to strengthen significantly through 2016 vs. the three next most traded international currencies—the euro, the yen and the pound. If those forecasts prove correct, there could be a significant drag on performance of an unhedged approach.”
HDEF’s underlying index has a 4.9% dividend yield. HDEZ’s underlying index has a 4.7% dividend yield. HDEE’s underlying index has a 4.8% dividend yield. Lastly, HDAW’s underlying index has a 4.9% dividend yield.
For more information on dividend stocks, visit our dividend ETFs category.
Max Chen contributed to this article.