Yield Seekers Are Being Forced to Look Overseas for Opportunities

Unless fixed income investors are willing to step out further on the yield curve, it’s difficult to quench the thirst for yield in today’s market environment. Nonetheless, there are options to be had if investors are willing to venture overseas.

One way to obtain yield is via dividend-producing funds with an international bent. An ETF that’s worth a look is the Global X SuperDividend ETF (NYSEArca: SDIV). SDIV seeks investment results that correspond generally to the price and yield performance of the Solactive Global SuperDividend Index, which tracks the performance of 100 equally-weighted companies that rank among the highest dividend-yielding equity securities in the world, including emerging market countries.

“The concept of an asset that can provide capital appreciation while still providing distributions above cash rates will always remain a theme for all seasons,” a Jefferies research note stated via a Barron’s article.

Around the world, different parts of the globe offer different options for yield seekers. The research note offered the following in:

  • Asia: “Investors often come to Asia in search of growth but are surprised by the growing dividend culture and the importance of capturing total returns. Asia is a natural oasis of growth, but at the same time payouts are relatively low, balance sheets are cash-rich, and [capital expenditure]decision making has significantly improved.”
  • Europe: “Europe has witnessed the biggest impact on dividends from COVID-19. Based on our dividend sustainability framework, health care, tech and staples have the highest sustainability, while [the worst is for]financials, property, and energy.”
  • Japan: “The structural rise in corporate Japan’s shareholder distribution in the form of record dividends and buybacks” is a testament to “companies embracing enhanced governance standards.”


High Yield Seekers Can Give this ETF a Look

High yield seekers looking to add more pop to their fixed income portfolio can take a look at the FlexShares High Yield Value-Scored Bond Index Fund (HYGV). The fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust High Yield Value-Scored US Corporate Bond IndexSM.

The index reflects the performance of a broad universe of U.S.-dollar denominated high yield corporate bonds that seeks a higher total return than the overall high yield corporate bond market, as represented by the Northern Trust High Yield US Corporate Bond IndexSM. The fund generally will invest under normal circumstances at least 80% of its total assets (exclusive of collateral held from securities lending) in the securities of its index.

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