A global approach to equity income can help investors increase portfolio yield while potentially bolstering long-term returns. The First Trust Dow Jones Global Select Dividend Index Fund (NYSEArca: FGD) is an exchange traded fund to help with those objectives.

Though FGD has a tempting yield, that does not mean there is not room for dividend growth as the ETF’s 100 holdings must “have a five-year average payout ratio of less than or equal to 60% for U.S. and European companies; or less than or equal to 80% for all other countries,” according to First Trust.

FGD has a 12-month distribution rate of 3.93%. 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.

FGD “which tracks the Dow Jones Global Select Dividend Index, marked its 10th anniversary last month. To be considered for inclusion in the index, companies must pay a current dividend, have a current-year dividend-per-share ratio greater than or equal to its five-year average ratio, and have a five-year average payout ratio of 60% or less for U.S. and European companies and 80% or less for all other countries. They must also have a three-month daily average trading volume of at least $3 million,” reports Investor’s Business Daily.

As a global ETF, FGD can hold U.S. stocks and it does to the tune of 13%. Australia is the ETF’s largest geographic exposure at 13.2%. France and Canada combine for over 22% of the fund’s weight.

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