By Boox Research
- PID is an exchange traded fund that invests in foreign stocks that have at least 5-years of consecutive annual dividend growth.
- Fund has gained momentum in recent months based on a more positive macro outlook, improving from weaker trends in recent years.
- We highlight a high concentration in Canadian and U.K. equities as a weakness but balanced by diversified sector exposure.
Invesco International Dividend Achievers ETF (NYSE:PID) with $177 million in total assets invests in non-U.S. companies that have increased their aggregate cash dividend payout consistently for at least five consecutive years. This is one of the few exchange traded funds with a focus on foreign stocks and dividend growth.
PID Investment Thesis
The PID ETF has gained momentum in recent months benefiting from an improving macro outlook which we see continuing through 2020. Easing trade tensions between the U.S. and China is supporting an expectation of a rebound in global growth and bullish sentiment for foreign stocks. While acknowledging some unique aspects of the fund’s strategy and construction methodology, we like PID as a portfolio diversifier and highlight its attractive 4% dividend yield. This is an income play with growth potential that we see as an attractive buy at current levels.
PID ETF Background
The Invesco International Dividend Achievers ETF tracks the ‘NASDAQ International Dividend Achievers Index’ which, as mentioned, tracks foreign stocks with at least five consecutive years of increasing dividends. The index features a “dividend yield weighting” methodology which is sometimes referred to a yield-tilt index. Essentially, the stocks with the highest yield on a trailing twelve-months-basis are weighted with a cap of 4% for any individual security. The excess weight of any capped security is distributed proportionally across the remaining stocks. The fund pays a dividend on a quarterly schedule with amounts variable based on not only the underlying holdings distributions but also the effective exchange rate given the exposure to foreign stocks.