Fixed income investors looking to get more yield can look to opportunities found overseas with the Global X MSCI SuperDividend EAFE ETF (EFAS).
International investing comes with its own nuances, but it’s certainly something that investors shouldn’t overlook when it comes to adding more diversification to their portfolios.
“A well-diversified portfolio typically includes representative allocations across asset classes, sectors and geographies,” a Wealth Management article notes. “However, U.S.-based dividend investors may often focus narrowly on domestic large-cap stocks. But dividend strategies are truly a global opportunity.”
“While the United States is the largest source of dividends, it only represents about half of the global dividend pool, according to MSCI. Developed markets in Europe and Asia contribute over 40% of global dividends and represent a potentially untapped diversification opportunity. And not all dividends are equal,” the article continues.
Benefits of EFAS:
- High income potential: EFAS accesses 50 of the highest dividend-paying equities present in the MSCI EAFE Index.
- Monthly distributions: Like every fund in the SuperDividend® family, EFAS makes distributions on a monthly basis.
- International exposure: Investing in international equities from Europe, Australasia, and the Far East can help diversify geographic, currency, and interest rate exposures.
Why International Dividends Exposure?
EFAS highlights all the benefits presented by the Wealth Management article. Namely, obtaining higher yield, capitalizing on rebounding economies following the pandemic, and getting value-focused equities exposure.
“Investing in international dividend growth stocks is compelling and rests on three pillars: higher yields, a post-pandemic dividend resurgence and attractive valuations,” Wealth Management notes. “Yield in the current low-rate environment generally remains scarce, especially among equity-based asset categories. However, as the chart below shows, international developed stocks have provided higher yield than domestic stocks, albeit with lower absolute-yield levels in today’s markets.”
COVID-19 certainly threw international investing for a loop. Dividend yields especially took a blow at the onset of the 2020 COVID-19 sell-offs, but things are starting to turn around.
“That said, yields on international stocks have fallen since the onset of the pandemic,” the article says further. “Compared to domestic stocks that held 2020 dividends essentially flat, international dividends fell by approximately 30%. There has been regional variation, however, with countries like Japan proving more resilient than European markets like Britain. And companies with long dividend growth histories have generally fared better, highlighting the importance of dividend growth discipline.”
For more news, information, and strategy, visit the Thematic Investing Channel.