A Sea of Dividends Awaits Thoughtful Investors

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Yield-oriented investors often choose domestic companies that pay high dividends, but this path may not always be ideal. With current equity valuations, there is some sentiment that the United States may not offer the best potential for stock market returns right now.

The U.S. market has been moving sluggishly of late, and better profits may be found overseas. One way to combine an overseas focus with income investing in a single exchange-traded fund (ETF) is through the SPDR S&P International Dividend ETF (DWX).

Investors who already have a portfolio full of domestic equities would be wise to diversify their holdings, on principle, to include foreign opportunities. The use of a single international ETF rather than investing in specific non-U.S. securities is particularly appealing because buying shares of multiple stocks requires paying additional commissions. This factor may make a fund’s expense ratios less of a concern when comparing choices. The expense ratio for DWX is 0.45%.

The best part about dividend-paying securities is that investors can benefit from their income alongside share-price appreciation. So far this year, DWX has appreciated by 3.05%. It also will pay out its 5.44% yield in the form of dividends over the course of the year. Its performance across a 12-month period is a bit weaker. However, the comparison includes a time when foreign markets were out of favor, as well as a drag from its large energy positions.


In terms of sector allocation, DWX’s funds are most concentrated in the energy sector, 25.04%; financials, 23.42%; and utilities, 15.27%. The largest specific companies in holding size for DWX are Canadian Oil Sands Limited, 4.14%; Baytex Energy Corp., 3.36%; Crescent Point Energy Corp., 2.77%; Royal Dutch Shell PLC Class A shares, 2.72%; and Vodafone Group PLC, 2.64%. The top 10 companies in its portfolio combine to total 28.04% of its assets.

If you have an interest in investing in dividend-based securities off the beaten path or need to add international exposure to an existing high-yield portfolio, SPDR S&P International Dividend ETF (DWX) may be worth including.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a domestic rising-dividend fund. I also invite you to comment in the space provided below.

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