Looking to invest abroad? There’s certainly a strong case for it right now, with U.S. equities expensive. Yes, the U.S. economy increasingly appears on track for a “soft landing,” but diversification remains key. Foreign equities offer some exciting opportunities, yes, but a lack of foreign knowledge can put off some U.S. investors. For those investors and others, it may be worth considering how dividends can boost the case for international equities ETFs, offering useful information about foreign firms.
What role do dividends play? Traditionally, firms pay out dividends when those firms are doing well and generating solid profits. While some may reinvest available cash to future growth, dividends offer near-term benefits to investors while also providing information. That information can help investors who may not have particular expertise investing in foreign countries that host otherwise attractive firms.
How International Equities ETF IDOG Works
That’s why it may be time to consider dividend stocks in international equities ETFs like IDOG. The ALPS International Sector Dividend Dogs ETF (IDOG) tracks the S-Network International Sector Dividend Dogs Index. IDOG charges a 50 basis point (bps) fee to track the index, having launched back in 2013.
The strategy invests in five firms with the highest dividend yields in each of the 10 GICS international market sectors. Doing so not only offers the international equities ETF helpful diversification across sectors, it also strengthens its dividend offerings. IDOG offers an annual dividend yield of 4.8%, more than 1% higher than its ETF Database category and FactSet segment averages. IDOG has returned 17.2% YTD, too, outperforming both averages on that metric as well.
The U.S. economy has resisted the challenges it’s faced so far, but diversification always helps. What’s more, international equities are robust on their own terms. The Vanguard Total International Stock Index Fund (VTIAX) has risen 10.2% YTD, for example. For those investors looking abroad for opportunities, consider how dividends can identify standouts in foreign firms.
For more news, information, and analysis, visit the ETF Building Blocks Channel.
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, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of IDOG.