It’s been a strong year for ex-U.S. equities. International equities ETFs have done very well following the spring swoon for U.S. stocks. While markets have recovered since then, investors remain interested in diversification based on flows data, and those ETFs have responded in kind. With that, however, how might one find a standout option in that category? It may be worth considering how dividends can help find the strongest strategies.
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How might dividends perform that role? Dividends can prove a particularly useful data point when considering firms’ outlooks. Analysts are familiar with numerous key statistics when it comes to a company’s prospects, like EBITDA, return on assets, price-to-earnings ratio, cash flow, and more. Dividends, however, can sometimes say more about how a company’s leadership sees its outlook — an important wrinkle.
Dividend-Focused International Equities ETF IDOG
That has helped the international equity ETF IDOG stand out so far this year. The ALPS International Sector Dividend Dogs ETF (IDOG) charges a 50 basis point fee to track an equal-weighted index of the five firms with the highest dividend yields in each of the 10 GICS sectors.
That helps the fund create a balanced view of international markets compared to market-cap-weighted approaches. What’s more, its emphasis on dividends helps it find strong contenders with bullish internal outlooks in a wider variety of categories.
Together, that approach has helped the fund return 25.8% YTD, according to ETF Database data. That outperformed both its ETF Database Category and FactSet Segment averages in that time. Those metrics come in at 22% and 18.19%, respectively.
Looking ahead, then, what might the future hold for a fund like IDOG? The international equities ETF, because of its equal weighting across sectors, can do well in high-commodity-cost times as well as when other international segments struggle. While that does limit its upside to some degree, it has still outperformed and can be worth using as a diversifier for U.S. investors.
VettaFi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for IDOG, for which it receives an index licensing fee. However, IDOG is not issued, sponsored, endorsed, or sold by VettaFi. VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of IDOG.
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