International Investing

High-Yield ETF’s Recent Loss Provides Opportunity

Although emerging markets do not get much press these days, thanks in part to bad returns in 2018, they’re off to a great start this year.

So perhaps it is not surprising that iShares Emerging Markets Dividend ETF (DVYE) is a top performer among the dozens of income-generating strategies I track. It is up over 3% so far in 2019.

One of the larger funds among the broad emerging market ETFs, DVYE has $530 million in assets that are managed by BlackRock. The iShares Emerging Markets Dividend ETF is down since the beginning of 2018 by almost 6%, but it’s still up over 30% since 2016.

Launched in 2012, DVYE is a smart-beta ETF, which by definition considers factors such as size, value and volatility instead of the typical cap-weighted index strategy, making it an ideal ETF for investors to maximize return and minimize risk.

This fund tracks the Dow Jones Emerging Markets Select Dividend Index — a dividend-weighted index of high-dividend-paying emerging markets companies, according to StockInvestor.com.

A recent Zacks article listed DVYE as a good high-yield ETF to own, since it paid a total of $2.13 a share in dividends in 2018 on a quarterly basis to produce a yield of more than 5.50%.

The focus of the iShares Emerging Markets Dividend ETF is much narrower compared to other emerging markets ETFs that track large-cap companies in market-cap-weighted indices by holding 100 of the highest-yielding stocks from emerging markets.

This fund’s top holdings, comprising 19.21% of its total assets, are Farglory Land Development Co. Ltd. (5522.TW), Seaspan Corp. (SSW), Severstal PAO (CHMF), Highwealth Construction Corp. (N/A), ALROSA PJSC (ALRS), Arcadyan Technology Corp. (3596.TW), Barwa Real Estate Co. QSC (BRES), Energy Company of Minas Gerais Participating Preferred (CMIG4.SA), Tatneft PJSC (TATN) and Novolipetsk Steel PJSC GDR (NLMK).

Exclusive ETF Talk: Strike Oil While the Market’s Hot!

Chart courtesy of Stockcharts.com

Long-term investors who are looking for exposure to emerging markets should consider this fund, which also is a good way to add international diversity to a portfolio. As always, investors should exercise their due diligence in deciding whether DVYE is a worthwhile investment.

As always, 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.