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.
Related: Best of Both Worlds With This Dividend ETF
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.
[related_stories]“As of April 4, 2016, the $670 million fund owned 100 stocks, of which 78 were large-cap, eight were mid-cap and 14 were small-cap. The fund is geographically diversified, with its largest weightings being in Canada and the United Kingdom. The fund suffered a particularly bad year in 2015, losing 19.33%. Year-to-date (YTD), as of April 2016, the fund was up 0.94%. Over the last 10 years, the fund returned 1.51% with an expense ratio of 0.55%,” according to Investopedia.
Related: How to tap Into Developed Market Dividend Growth
PID offers ample exposure to many of the blue-chip laden sectors dividend investors favor when mining for U.S. income stocks. That includes over 27% of the ETF’s weight going to the energy sector. That cuts both ways. PID’s energy exposure gives the ETF leverage to a recovery in that beaten up sector, but it also makes the ETF vulnerable in the event of further oil price declines.
Financial services and materials names combine for over a third of PID’s weight. The ETF’s emerging markets exposure is light with India and Russia combining for 5.6% of PID’s geographic lineup.
PowerShares International Dividend Achievers Portfolio
