Global dividend growth hit a record $1.4 trillion last year, but the pace of payout hikes moderated, according to a new report Janus Henderson.
While the U.S. remains a primary driver of dividend growth, some other markets are contributing as well, potentially spelling opportunity with ETFs such as the ProShares MSCI EAFE Dividend Growers ETF (CBOE: EFAD).
EFAD tracks the MSCI EAFE Dividend Masters Index, which includes members of the MSCI EAFE Index that have dividend increase streaks of at least 10 consecutive years.
“In U.S. dollar terms, payouts totaled about $1.43 trillion, up 3.5% from a year earlier. Still, dividend growth slowed from nearly 10% and 8% in 2018 and 2017, respectively,” reports Lawrence Strauss for Barron’s. “Companies in North America, Japan and emerging markets were key contributors to last year’s growth, while Europe and Asia lagged behind.”
Vital Global Growth Traits
Japan, one of the primary drivers of global payout growth outside the U.S., is EFAD’s second-largest geographic exposure at 18%. Japan provides meaningful dividend growth exposure with more to come as cash-rich companies there continue elevating buybacks and payouts.
Home to scores of cash-rich companies and with a dividend yield that is lower than other major developed markets, Japan has the room to be a major driver of developed markets dividend growth in the coming years.
“Dividends in Japan grew 8.4%. As Barron’s noted in a recent cover story, companies in that country have been returning more capital to shareholders via dividends and share repurchases,” according to Barron’s.
EFAD may help investors gain improved risk-adjusted returns to European markets by diminishing downside risk while still participating in upside potential. Furthermore, its dividend focus also helps investors focus on quality companies with a history of growing dividends. There are good reasons to consider EFAD over a traditional, broad developed markets ETF.
Related: Span the Globe For Dividends…It’s Worth It
EFAD may help investors gain improved risk-adjusted returns to European markets by diminishing downside risk while still participating in upside potential. Furthermore, its dividend focus also helps investors focus on quality companies with a history of growing dividends. There are good reasons to consider EFAD over a traditional, broad developed markets ETF.
Europe ex-UK accounts for almost a third of the fund’s geographic weight.
“On a dollar basis, the firm (Janus Henderson) expects dividends to grow 3.9% in 2020, slightly ahead of last year’s pace,” reports Barron’s.
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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.