Domestic dividend growth remains impressive in 2018, but some other developed markets are getting on that act. Earlier this year, dividend growth in some major European economies hit record levels, indicating payout growth is widespread on a global basis.
The SPDR S&P Global Dividend ETF (NYSEArca: WDIV) provides exposure to that theme. The ETF follows the S&P Global Dividend Aristocrats Index, which requires a minimum dividend increase of a decade.
WDIV “includes the top 100 qualified stocks with highest indicated dividend yield, with no more than 20 stocks selected from each country and 35 stocks from each GICs sector,” according to State Street Global Advisors (SsgA).
“The index methodology aims to achieve a balance between high dividend yield and dividend sustainability and growth. It incorporates criteria on dividend payout ratio and maximum indicated dividend yield, to exclude companies whose future dividend payout may be considered potentially less sustainable. The index is weighted by indicated annual dividend yield to tilt the portfolio towards companies with higher dividend yields,” according to S&P Dow Jones Indices.
Inside ‘WDIV’ ETF
The $200.54 million WDIV is almost five and a half years old and is home to 99 stocks.
“The yield on WDIV is approximately 3.75%, significantly above the dividend yield of the S&P 500 (at about 1.87%) and its U.S.-only dividend-paying ETF counterparts,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in an interview with Investor’s Business Daily. “Given the global nature of this ETF, it is subject to some additional risks, mainly currency risk and foreign market risk.”
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WDIV features exposure to 23 countries, but the U.S. and Canada combine for 41.62% of the fund’s geographic weight. WDIV’s top sector weights are utilities, financial services and real estate. Those sectors combine for about two-thirds of the fund’s weight.
“Odds are that market fundamentals will win out and that this 10-year-old bull market still has some — albeit shakier — legs to it,” said Pursche in the IBD interview.
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