“Even in out-of-favor regions, such as Europe, dividends continue to increase, driven by ongoing economic and earnings growth. Looking further ahead, the impact on global trade of escalating tariff battles with the U.S. could have a negative impact on corporate profitability, though its magnitude is highly uncertain at present,” Ben Lofthouse, head of global equity income at Janus Henderson, said in the report.
Nevertheless, income-minded investors may gain exposure to the more attractive dividends out of global markets through targeted ETF strategies. An option to consider among international dividend ETFs is the iShares International Select Dividend ETF (CBOE: IDV). IDV requires that components be taken from developed countries in Europe, Pacific, Asia and Canada. Securities must also meet dividend payout consistency and growth metrics, along with profitability and minimum liquidity levels. Holdings are then weighted by dividend yield. IDV has a 4.64% 12-month yield.
The WisdomTree International SmallCap Dividend Fund (NYSEArca: DLS) is another option, except this ETF specifically screens for dividend-paying small-caps to help investors satisfy demand for income, along with growth potential. DLS has a 3.31% 12-month yield.
The FlexShares International Quality Dividend Index Fund (NYSEArca: IQDF) takes a quality approach to ex-US dividend payouts. IQDF screens for management efficiency, profitability and cash flow. Each company has to show management efficiency, or firms that efficiently deploy capital and make smart financing decisions. 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. IQDF has a 4.65% 12-month yield.
ETF investors interested in dividend-focused stock exposure outside the U.S. can also look to the SPDR S&P International Dividend ETF (NYSEArca: DWX). The U.K., Australia and Canada, solid ex-U.S. developed market dividend destinations, combine for the bulk of DWX’s weight, and the ETF also includes emerging market exposure. DWX follows its own liquidity, profitability and dividend growth criteria. The index also weights components by dividend yield. DWX has a 4.40% 12-mont yield.
For more information on yield-generating stocks, visit our dividend ETFs category.