As global markets continue to evolve, in ETF trading, international dividend ETFs offer investors a unique opportunity to diversify their portfolios, the right international dividend ETFs can help enhance your investment strategy.
The iShares International Dividend Growth ETF (Cboe BZX: IGRO) is a passively managed fund from BlackRock that focuses on international dividend-paying stocks. This ETF tracks the performance of the Morningstar Global ex-US Dividend Growth Index, which comprises equities with a strong track record of consistent dividend payments.
To qualify for inclusion in the index, a stock must have increased its dividend annually for a minimum of five consecutive years and maintain a dividend payout ratio of less than 75%. Additionally, the index excludes stocks with a dividend yield in the top 10% within their respective geographic regions.
The iShares International Dividend Growth ETF (IGRO) charges a low expense ratio of just 0.15%, or $15 per $10,000 invested, which is one-quarter the cost of BlackRock’s actively managed ETF, BIDD. Currently, IGRO has $897 million in net assets spread across 398 holdings, with a yield of 2.57%, more than double that of the S&P 500.
Geographically, the top three countries represented in the fund are Canada (20.62%), Japan (20.35%), and Switzerland (10.52%). Sector-wise, the largest allocations are to financials (27.48%), industrials (14.52%), and healthcare (14.21%). Notably, large-cap stocks comprise 89% of the ETF’s portfolio.
The top ten holdings make up 27% of the fund's net assets, including two major Canadian banks: Toronto Dominion Bank (NYSE: TD) and Royal Bank of Canada (NYSE: RY).
Launched in May 2016, IGRO has achieved an annualized total return of 7.39% since its inception through October 31.
The Xtrackers MSCI EAFE High Dividend Yield Equity ETF (NYSEARCA: HDEF) tracks the performance of the MSCI EAFE High Dividend Yield Index, offering a robust current yield of 4.33%, nearly double that of IGRO.
Launched in August 2015, HDEF employs a full replication strategy, ensuring that the weights of its holdings closely mirror those in the index. However, if the fund cannot hold specific components of the index, it may utilize a representative sampling indexing strategy.
The index includes companies from 20 countries across Europe, Australasia, and the Far East (EAFE), such as Australia, Austria, Belgium, China, Denmark, Finland, France, Germany, Hong Kong, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
HDEF currently has $1.66 billion in net assets invested in 116 stocks, with the top ten holdings accounting for nearly 41% of the total. The leading sectors by weight are financials (23.66%), consumer staples (16.32%), and healthcare (14.75%). The top three countries represented are the United Kingdom (20.89%), Switzerland (20.38%), and France (15.22%).
The ETF charges a low expense ratio of 0.09%, which is six basis points lower than IGRO. Since its inception in 2015, HDEF has achieved an annualized total return of 5.30%.
The WisdomTree International Hedged Quality Dividend Growth Fund (NYSEARCA:IHDG) yields 1.76%. Although that is less than the other two ETFs on my list, it makes up for this with an average annual return of 9.39% through Oct. 31 since its inception in May 2014.
The ETF follows the performance of the WisdomTree International Hedged Quality Dividend Growth Index, which consists of the top 300 companies from the WisdomTree International Equity Index. These companies are ranked according to their growth and quality characteristics.
The holdings within the ETF are weighted according to the annual cash dividends paid by each company. For instance, if Company A pays $2 in annual dividends and Company B pays $3, with the total annual dividends for all 300 companies amounting to $600, Company A would have a weight of 0.33% (calculated as $2 divided by $600), while Company B would have a weight of 0.5%.
The index and the ETF are rebalanced annually.
IHDG currently has $2.68 billion in net assets, with the top 10 holdings representing 33% of the total. The leading sectors by weight are industrials (20.18%), consumer discretionary (17.65%), and healthcare (16.59%). The top three countries represented are the United Kingdom (18.52%), Japan (17.81%), and Germany (10.21%).
When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
