In this current low yield environment, fixed income investors are having a hard time looking for the yield they desire, which opens up opportunities for dividend-yielding assets. However, investors can’t be fixated on the yield itself, but also on the quality of the dividends and their sustainability.
“Valuation is important in the investing world. Pay too much for even a great company and it can very quickly turn into a bad investment,” wrote Reuben Gregg Brewer in a Motley Fool article. “That’s one of the core underpinnings of value investing. The extreme value case is buying what some have called cigar butt companies, which are down and out but so cheap that there’s still some value to be had. That’s not the right approach for most investors. The better option, particularly for conservative types, is to find well-run companies and wait until they trade at an attractive price — a tactic laid out in the iconic book The Intelligent Investors by Benjamin Graham, the man who helped train Warren Buffett.”
Exchange-traded fund (ETF) investors can look at the FlexShares Quality Dividend Defensive Index Fund (QDEF).QDEF seeks investment results that correspond generally to the price and yield performance of the Northern Trust Quality Dividend Defensive IndexSM.
The underlying index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater financial strength and stability characteristics relative to the Northern Trust 1250 Index, a float-adjusted market-capitalization weighted index of U.S. domiciled large- and mid-capitalization companies. The fund will invest at least 80% of its total assets (exclusive of collateral held from securities lending) in the securities of the underlying index.
International Dividend Exposure
There are dividend opportunities overseas for investors who are unable to find the yield they want at home As such, here are a few international funds to consider with an emphasis on dividends:
- FlexShares International Quality Dividend Dynamic Index Fund (IQDY): seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust International Quality Dividend Dynamic IndexSM. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater financial strength and stability characteristics relative to the Northern Trust International Large Cap Index. The fund will invest at least 80% of its total assets in the securities of the index and in ADRs and GDRs based on the securities in the index.
- FlexShares International Quality Dividend Index Fund (IQDF): seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust International Quality Dividend IndexSM. The index reflects the performance of a selection of companies that, in aggregate, possess greater financial strength and stability characteristics relative to the Northern Trust International Large Cap Index, a float-adjusted market-capitalization weighted index of non-U.S. domiciled large- and mid-capitalization companies. The fund will invest at least 80% of its total assets in the securities of the index and in ADRs and GDRs based on the securities in the index.
- FlexShares International Quality Dividend Defensive Index Fund (IQDE): seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust International Quality Dividend Defensive IndexSM. The underlying index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater financial strength and stability characteristics relative to the Northern Trust International Large Cap Index. The fund will invest at least 80% of its total assets in the securities of the underlying index and in ADRs and GDRs based on the securities in the underlying index.
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