Investors considering exposure to international equities can add dividends to that equation. A slew of ETFs meet that objective with one of the more unique international dividend ETF offerings being the VictoryShares International High Div Volatility Wtd ETF (NASDAQ: CID).
CID “provides exposure to dividend-yielding, international stocks, without subjecting investors to the inherent limitations of traditional market-cap or yield weighting. It seeks to provide investment results that track the performance of the CEMP International High Dividend 100 Volatility Weighted Index,” according to VictoryShares.
Ex-U.S. developed market dividend payers often feature larger yields than their U.S. counterparts, an assertion proven by comparing large- and mega-cap dividend stocks from familiar dividend sectors such as consumer staples, energy, financial services and telecommunications.
CID is a departure from the MSCI EAFE Index, one of the most widely followed gauges of ex-US developed markets equities. For instance, at the geographic level, CID devotes a quarter of its combined weight to Australia and Hong Kong. Those countries combine for just 10% of the MSCI EAFE Index. However, Australia is one of the top ex-US dividend growth markets and one of the highest-yielding developed markets in the world.
The U.K. and Canada also combine for nearly a quarter of CID’s weight. Again, those are two of the top ex-US dividend destinations. Canada is not part of the MSCI EAFE Index.
“Many foreign stocks tie their dividend payments to earnings,” said Morningstar in a recent note. “Therefore, companies that have a history of increasing their dividend payments are also likely to be those that have been consistently growing profitably. This fund’s return on invested capital comes in at 17.3%, compared with 12.5% for the MSCI ACWI ex-USA Growth Index. It also lands in the top quintile of the foreign large-growth Morningstar Category.”
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Home to 102 stocks, CID features a tantalizing trailing 12-month dividend yield of almost 4.7%, well above what is found on traditional developed markets benchmarks. CID’s big dividend yield is owed, in part, to a combined 31% weight to the utilities telecommunications sectors. Financial services and industrial names combine for over 37% of the ETF’s weight.
The weighted average market value of CID’s holdings is nearly $28 billion. CID is up more than 14% year-to-date.
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