Low U.S. Interest Rates Boost International Dividend ETFs

Experienced dividend investors know the utility of adding some international holdings to their income portfolios, whether by way of individual stocks or exchange traded funds (ETFs).

The explanation is straight forward: Ex-U.S. developed market dividend payers often feature larger yields than their U.S. counterparts, an assertion proven by comparing large- and mega-cap dividend stocks from familiar dividend sectors such as consumer staples, energy, financial services and telecommunications.

Low interest rates in the U.S. have sent investors flocking to dividend stocks and exchange traded funds in recent years. With central banks throughout the developed world paring rates and engaging in monetary easing, government bond yields are falling, giving investors good reason to consider international dividend ETFs.

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One of those offerings is the PowerShares International Dividend Achievers Portfolio (NYSEArca: PID).

PID only includes companies that have continually increased dividends, and holdings are weighted by dividend yields. The combination of listing requirements and dividend growth means that the majority of components are from developed countries, like the U.K. and Canada. Those countries combine for over 48% of the ETF’s weight.