Dividends

Seeking Dividend Income from Overseas in Turbulent Times

This week’s featured fund, the O’Shares FTSE Russell International Quality Dividend ETF (ONTL), reaches out to international companies in pursuit of dividend income.

ONTL is a multi-factored fund designed to reflect the performance of publicly listed, large-capitalization and mid-capitalization, dividend paying issuers outside of the United States that exhibit high quality, low volatility and high dividend yields. The fund caps its constituent weights to 5% with quarterly rebalances in order to maintain diversification. For this exposure, ONTL charges an expense ratio of 0.48%, which is in line with the segment average.

ONTL’s portfolio exhibits a bias towards European countries, due to the outstanding dividend stability that many European companies are known for. As of June 30, 2018, ONTL is 17.58% invested in the United Kingdom, 12.86% in Switzerland, 10.98% in France, 10.74% in Japan and 8.10% in Australia.

Year to date, ONTL is down 3.75%. This is correlated to the widespread poor performance of many international stock markets, which have come under pressure from slowed growth and political unrest. For example, The FTSE 100, which is an index that measures the 100 companies listed on the London Stock Exchange with the highest market capitalization, fell by 0.4% for the year. The Swiss Market Index (20 of the largest Swiss blue-chip stocks) is down 4.5% for the year and Japan’s market is down 3.7% year to date. These are some of the countries to which ONTL has the highest degree of exposure.

Since its inception on March 22, 2017, ONTL has return 8.81%. The fund offers a distribution yield of 3.05% and pays monthly. Management has advised investors that the fund’s combination of reduced volatility, high quality and strong dividend track records are geared to reward investors over the long term.

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Top holdings in the fund are Nestle, 3.62%; Roche Holding, 3.26%; Novartis, 3.25%; GlaxoSmithKline, 2.40%; and Total S.A., 2.35%.

Because the fund’s objective is to seek out dividend income, it places a heavier weighting on sectors such as health care and real estate and much less on technology. A detailed breakdown of ONTL’s sector allocation is as follows: 16% in health care, 15% in industrials, 15% in consumer staples, 9% in consumer discretionary and 8% in real estate.

For investors who are looking for stable dividend income from overseas, make sure to do your due diligence on O’Shares FTSE Russell International Quality Dividend ETF (ONTL) before making any investments.

I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.