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.
One of the more compelling options among international dividend ETFs is also one of the newest: The Vanguard International Dividend Appreciation ETF (NasdaqGM: VIGI), which debuted in early March.
VIGI is the international answer to the popular Vanguard Dividend Appreciation ETF (NYSEArca: VIG), the largest U.S. dividend ETF.
VIGI, one of just two new ETFs launched by Vanguard this year, “emphasizes stocks exhibiting dividend growth and seeks to track the Nasdaq International Dividend Achievers Select Index, which comprises more than 200 all-cap developed and emerging markets stocks with a track record of increasing annual dividend payments,” according to Vanguard.
“In keeping with Vanguard’s tradition of low fees, VIGI is less expensive than 78% of competing funds. This new ETF mixes developed and emerging economies with European nations accounting for over 38% of the lineup and emerging markets chiming in at nearly 23%,” reports InvestorPlace.
Other international dividend ETFs include the PowerShares International Dividend Achievers Portfolio (NYSEArca: PID), FlexShares International Quality Dividend Index Fund (NYSEArca: IQDF) and the WisdomTree International Dividend ex-Financials Fund (NYSEArca: DOO).
With nearly $231 million in assets under management as of the end of November, VIGI is easily one the most successful new ETFs to come to market in 2016.
VIGI debuted alongside the Vanguard International High Dividend Yield ETF (NasdaqGM: VYMI). VYMI will reflect the performance of the FTSE All-World ex US High Dividend Yield Index, which is composed of over 800 of the highest yielding large- and mid-cap developed and emerging market securities.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.