With so much uncertainty remaining around the Fed’s rate cycle and the potential for recession, many investors are beginning to look toward international equity markets for the means to build income. Yields continue to look attractive for international dividend ETFs, in particular.
International high dividend ETFs are funds that hold overseas companies whose dividend payouts have been consistently high (high dividend yield) or which have consistently grown over time (dividend appreciation). In this article, we examine key characteristics of four popular international dividend ETFs, using data from ETF Database and LOGICLY. We also use LOGICLY’s compare tool to look at all of the fund’s YTD performances.
For yields, we encourage readers to visit our list of the Top 100 ETFs with the Highest Dividend Yield, updated daily using FactSet data.
Vanguard International High Dividend Yield ETF (VYMI)
One popular non-US dividend ETF is the $6.4 billion Vanguard International High Dividend Yield ETF (VYMI).
VYMI tracks the performance of the FTSE All-World ex-US High Dividend Yield Index. This index provides exposure to stocks outside the US that have the opportunity to deliver quality dividend yields, with nearly 48% of its portfolio in European companies. Another 40% are in Asia-Pacific stocks.
VYMI’s top three holdings are Roche Holding (ROG:SWX), Shell Plc (SHEL: LON), and Novartis (NOVN: SWX), each at 1.8% of the portfolio.
Since the start of the year, VYMI has brought in nearly $900 million in cumulative flows. It has an expense ratio of 0.22%, which is significantly below the average for its category on ETFDB.com.
According to LOGICLY, the fund currently has a dividend yield (TTM) of 4.53%.
Vanguard International Dividend Appreciation ETF (VIGI)
Vanguard also offers the $5.2 billion Vanguard International Dividend Appreciation ETF (VIGI) as another option for investors looking for non-US dividend-paying stocks. Whereas VYMI focuses on high dividend stocks, VIGI focuses on dividend appreciation, however.
VIGI tracks the S&P Global Ex-U.S. Dividend Growers Index, which focuses on stocks from developed and emerging markets. It also has a 49% allocation to European companies but a slightly smaller Asia-Pacific allocation than VYMI, at 34%.
VIGI’s top three holdings are Novartis (NOVN: SWX) at 4.6% of the portfolio, Novo Nordisk (NOVO.B: CSE) at 4.3%, and Nestle (NESN: SWX), at 4.0%.
This year alone VIGI, which currently has a dividend yield (TTM) of 2.12% according to LOGICLY, has seen $728.73 million in cumulative inflows. VIGI has an expense ratio of 0.15%.
See more: “Top Emerging Market Bond ETFs for Advisors and Investors“
Pacer Global Cash Cows Dividend ETF (GCOW)
However, there are plenty of non-Vanguard dividend ETFs that offer exposure to markets outside the US. One popular fund with investors this year is the $1.7 billion Pacer Global Cash Cows Dividend ETF (GCOW), which has brought in nearly $600 million in flows year-to-date.
GCOW seeks to provide a consistent stream of income over time by screening for businesses with both strong free cash flow yield and significant dividend yield.
GCOW isn’t an ex-US fund; 62% of its portfolio is in the Americas, with 33% of the portfolio in the US. However, it also has 22% of its portfolio in European stocks and another 14% in Asia-Pacific stocks.
The fund’s top three holdings include EOG Resources (EOG) at 2.2%, Pioneer Natural Resources (PXD) at 2.2%, and Woodside Energy Group’s ADR (WDS) at 2.1%.
GCOW has an expense ratio of 0.60%. According to LOGICLY, the fund currently has a dividend yield (TTM) of 4.67%.
WisdomTree Emerging Markets High Dividend Fund (DEM)
For those looking to concentrate solely on emerging markets, one international dividend ETF to consider is the $2.6 billion WisdomTree Emerging Markets High Dividend Fund (DEM).
DEM tracks companies in emerging markets with a high dividend yield, including equities from Taiwan (31%), China (23%), and Brazil (13%). Its top holdings include Vale (VALE3:BSP), at 5%; Petroleo Brasiliero SA (PETR3:BSP), at 4%, and MediaTek (2454:TAI), at 3.5%.
The fund, which has seen consistent inflows this year, has brought in close to $600 million in YTD cumulative flows. According to LOGICLY, the fund currently has a dividend yield (TTM) of 7.72%.
DEM has an expense ratio of 0.63%.
How Have International Dividend ETFs Performed YTD?
DEM, GCOW, VIGI and VYMI YTD Performance. Source: LOGICLY.
Using LOGICLY’s comparison tool, we can look at the year-to-date performances of each of these funds against one another.
Emerging markets have been the clear performance standout; DEM has led the pack with an 11.8% return in 2023. It has also led the in the last 12 months with an impressive 14.3% return.
Meanwhile, VYMI has seen the second-highest year-to-date return of 9.7%, with a 12.4% return over the past 12 months.
While GCOW has posted the lowest 2023 returns of the group (9.2%), it handily outperformed both Vanguard products over the past 12-month period, with a 13.9% return.
Overall, these funds offer investors the opportunity for investors to gain exposure to non-U.S. stocks while bringing in a consistent income stream. However, as with any investment, investors should carefully consider their risk tolerance and goals before investing in any international dividend ETF.
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