International equities have finally gotten their respective acts together relative to U.S. stocks. That resurgence includes dividend payers. Take the case of the ALPS International Sector Dividend Dogs ETF (IDOG).
Following a gain of half a percent last Friday, IDOG went into the weekend sitting at 52-week high, while sporting a year-to-date gain of nearly 26%. Think about IDOG this way: A dedicated developed markets ETF focusing on high dividend payers with just 10.57% allocated to technology stocks is beating the S&P 500 by a margin of nearly 2-to-1 since the start of the year.
Among the drivers of IDOG’s 2025 bullishness are French and Japanese stocks. Those combine for over 31% of the ETF’s geographic exposure. The relevant MSCI France and Japan indexes, like IDOG itself, are sharply outpacing domestic equities this year. Investors that missed out on IDOG’s fast start to 2025 might not need to worry. Some experts believe international equities have more upside in store.
IDOG Has Catalysts
One of the reasons why IDOG could generate more upside into year-end and in 2026 is because many U.S. investors, even plenty of advisors, remain under-allocated to international stocks. They may be compelled to alter that thinking, as gauges like the MSCI EAFE Index race higher.
“After the extended run of U.S. stocks—powered mainly by large technology firms—many U.S. investors may discover their portfolios have drifted too far toward domestic equities,” noted Mark Hackett of Nationwide. “While non-U.S. stocks comprise nearly 40% of global equity market capitalization (as measured by the MSCI ACWI® Index , the average investor has only around one-quarter of their stock portfolio allocated to international stocks.”
Additionally, IDOG and ex-U.S. stocks at large have been bolstered by the declining U.S. dollar. More downside for the greenback could be in store if the Federal Reserve continues cutting interest rates. Even if the dollar plateaus, that doesn’t mean international stocks will be stymied. It appears unlikely a dollar rally will materialize over the near term.
“While the U.S. dollar has weakened throughout 2025, international stocks have soared on the ensuing tailwind. U.S. dollar weakness boosts international returns for U.S. investors by increasing the value of foreign earnings when converted back to U.S. dollars,” added Hackett. “An appreciating U.S. dollar has the opposite effect, lifting U.S. stocks and weighing on dollar-based international investors. This factor helped U.S. markets outperform in the last decade, but now the effect is happening in reverse.”
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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. VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of IDOG.
