Investors looking for additional equity income would be well deserved to add some international diversity to their domestic dividend exposure, an objective that can be accomplished with 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. That’s one of the more stringent requirements among any ETF in the international dividend category.

Stocks in Europe and in international developed markets often have higher yields than those in the U.S. That means it’s possible to take advantage of a dividend growth strategy and relatively high dividend yields. International dividend growth stocks also come without the added U.S. interest rate sensitivity of high dividend paying stocks.

“Just consider the recent dividend yields of several international stock indexes compared with the S&P 500’s 1.8%,” reports Lawrence Strauss for Barron’s. “The DAX in Germany was at 2.9%, and the FTSE 100, which tracks companies in the United Kingdom, yielded 4.6%. The Topix in Japan, where yields have been on the rise as companies allocate more capital to dividends and buybacks, was at 2.3%. The Ibovespa in Brazil was offering 2.9%.”

EFAD Excellence

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 ETFs 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.

“Another selling point for overseas dividend stocks is that, along with higher yields, many sport lower valuations than U.S. shares. The S&P 500 recently fetched 18.7 times the current fiscal year’s profit estimate, compared with 14.6 times for the Topix, 13.6 times for the FTSE 100, and 13.8 times for the Ibovespa,” according to Barron’s.

Home to 87 stocks, EFAD allocates 43.41% of its weight to the U.K. and Japan. Those two markets aren’t just heavily discounted relative to the S&P 500, but they are steady sources of dividend growth and, in the case of Japan, massive share repurchases.

For more on core investing strategies, visit our Core ETF Channel.

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.

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