Outside of the U.S., the U.K. is often one of the most reliable dividend growth markets, a theme that was on display in the first quarter.
“Dividends paid to holders of UK shares jumped to a record high in the first three months of the year, putting investors on track for £100bn in payouts this year,” reports The Guardian. “The payments rose 15.7% to £19.7bn, easily a first-quarter record, according to data tracked by Link Asset Services.”
The U.K. is a major country weight in a slew of ex-US developed markets exchange traded funds (ETFs), including dividend strategies 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. The U.K. is EFAD’s largest geographic exposure at 26.50%.
What’s Next for the U.K.?
In the U.K., “regular dividends have risen every year since the aftermath of the global financial crisis in 2009. Between that year and 2018, total dividends paid to shareholders grew by 85%,” reports The Guardian.
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.
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.
“The big increase in dividend income in the first quarter of 2019 was mainly driven by a £2.6bn special dividend from the FTSE 100 mining company BHP. The largest dividend payment in the quarter, at £2.9bn, was the oil company Royal Dutch Shell, while pharma company Astrazeneca, oil giant BP, Vodafone and British American Tobacco all paid out more than £1bn in the quarter,” according to The Guardian.
Telecom giant Vodafone is a member of EFAD’s roster. EFAD is up 11.31% this year.
For more on core investing strategies, visit our Core ETF Channel.