Investors looking for added equity income at a time of still low interest rates throughout the developed world can consider international dividend exchange traded funds. A compelling option from that group is the O’Shares FTSE Russell International Quality Dividend ETF (NYSEArca: ONTL).
The O’Shares FTSE Russell International Quality Dividend ETF debuted in March and “is designed to be a core investment holding, providing cost efficient access to a portfolio of large cap high quality, low volatility, dividend paying international companies (ex US) selected based on fundamental metrics,” according to O’Shares Investments.
ONTL’s emphasis on quality metrics positions investors for steady dividend growth while potentially steering clear of companies that could cut or suspend dividends. Companies with wider profit margins are better positions to grow and maintain dividends than those with slimmer margins. Additionally, firms that can meet debt obligations and day-to-day liquidity needs are better capable of maintaining dividends.
ONTL “can be used to augment or complement yield-weighted dividend ETFs because this funds takes a different approach. While ONTL yields over 2.7%, this international dividend ETF takes steps to avoid risky high-yield stocks,” reports InvestorPlace.
Specifically, the quality factor is based on profitability, efficiency, earnings quality and limited leverage, which have historically been a good way to separate good companies from weaker ones. A volatility screen is also in place to focus on stocks that exhibit lower volatility, which tend to perform better.