Despite inflation and tight monetary policy conditions, dividends around the world hit a record high last year according to Reuters. This could certainly benefit exchange traded funds (ETFs) in 2024 like the ALPS International Sector Dividend Dogs ETF (IDOG).
With the expectation that interest rates will fall, corporate dividends can offer fixed income investors diversification, particularly if their portfolios mainly comprise bonds. When interest rates eventually fall, reduced borrowing costs globally could also increase the bottom line, thereby boosting revenues and dividends.
“Corporate dividends globally hit an all-time high of $1.66 trillion in 2023, with record payouts by banks making up half of the growth, a report showed on Wednesday (March 13),” the report noted. It added that globally, “86% of listed companies either increased dividends or maintained them, according to the quarterly Janus Henderson Global Dividend Index (JHGDI) report, which also forecast that dividend payouts would hit a new record of $1.72 trillion this year.
IDOG seeks investment results that replicate as closely as possible the performance of the S-Network International Sector Dividend Dogs Index (IDOGX). The fund has a 30-day SEC yield of 6.16% as of February 29. It’s an option for fixed income investors looking for other pathways toward yield distributions aside from bonds. This presents a compelling option given the anticipation of lower interest rates to come.
A Unique Selection Process
IDOG uses a unique selection process that enables the fund to offer high-yielding income. It applies the “Dogs of the Dow Theory” on a sector-by-sector basis using the S-Network Developed International Equity 1000 Index as its starting universe of eligible securities. IDOG provides high dividend exposure across 10 sectors of the market by selecting the five-highest-yielding securities in each sector and equally weighting them.
The fund offers deep country diversification as well, searching for dividend opportunities in countries like the United Kingdom, France, and Netherlands to round out the top three in the fund’s geographic breakdown of its asset allocation. Sectorwise, financials, technology, and consumer staples are part of its top three. For fixed income seekers, the fund’s distribution occurs on a quarterly basis.
VettaFi LLC (“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, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of IDOG.
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