Three Global Dividend ETFs Worth A Look

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October 27, 2013 6:41pm NYSE:DWX NYSE:LVL

yieldThe recovery in the U.S. market has been spectacular this year with major indexes recording multi year highs and equities experiencing heavy inflows.

But thanks to some recent market volatility and the lack of a Fed Tapering, dividend focused investing has come back into the spotlight. Investors still seek these higher dividend ETFs as they not only offer higher yields, but also provide for capital appreciation too (Retire Early with these 3 Dividend ETFs).

Furthermore, investors should also note that high dividend paying stocks play a defensive role in a portfolio and can help to reduce volatility in otherwise shaky times. This can be especially true when investors look at high dividend paying ETFs which have the benefits of high yields, but spread risk around a variety of sectors and firms.

This has resulted in a huge inflow of asset in income funds in 2013 which also bears testament to the segment’s popularity. Although U.S. dividend ETFs have been in the limelight among income starved investors over the last couple of years, many also want to consider funds which focus on securities outside the U.S. and onto international markets instead.

Many securities in this corner of the market offer payouts that not only crush 10-year treasury rates, but also easily outpace S&P 500 yields as well. International dividend ETFs not only provide a good level of yield to an investor but also diversification benefits as well, particularly from a geographic look.

For income investors, a glance at some of the ETFs that provide outsized payouts with international exposure could be warranted. This holds true especially for the products that have achieved noteworthy dividend rates.

In fact, investors will find some ETFs have yields in the high single-digit percentage range. This may give investors new ideas for ways to achieve higher levels of current income without too much of a focus on the domestic market, taking advantage of the economies outside U.S.

Below we are highlighting 3 ETFs that have both impressive yields and a global focus, any of which could be interesting picks to close out the year:

Global X Super Dividend ETF (NYSEARCA:SDIV)

SDIV represents a compelling product to invest in international markets with a focus on high yields. SDIV is an equally weighted basket of 100 high yield stocks from around the world. With 30% exposure in U.S. equities, the fund also provides access to securities in Europe, Australia, Asia, Canada and Latin America.

Among sectors, real estate, financial services, telecommunication and utilities remain the top four choices for the fund. SDIV charges a fee of 58 basis points annually.

The fund’s tilt towards REITs has really worked well as these securities represent an alluring blend of higher returns and impressive yields. The distribution yield at 7.61% represents a good opportunity for investors to generate some income by investing overseas. The fund has gained 12.32% over the period of one year.

SPDR S&P International Dividend ETF (NYSEARCA:DWX)

For global exposure in the ETF space, investors can look to State Street’s DWX, which was launched in Feb 2008. The fund tracks the price and performance of the S&P International Dividend Opportunities Index, thereby giving investors an option to play with dividend paying stocks on a global basis.

With asset under management of $1.3 billion, this fund provides exposure to the stocks globally that provide high dividend yields (4 Excellent Dividend ETFs for Income and Stability).

The fund has an attractive dividend yield of 6.48% thereby providing a good level of current income to investors. DWX has an edge in expenses as it charges an expense ratio of 45 basis points, the lowest on the list.

DWX provides exposure to 122 high dividend yield international stocks while around 18.4% of which make up the top 10 holdings. Among individual holdings, Belgacom SA, Ferrovial S.A and UPM-Kymmene Oyj are the top three choices of the fund with asset investment of 2.30%, 2.14% and 2.03%, respectively.

Among sector holdings, it has been noted that dividend focused ETFs are generally inclined towards financials, telecommunication and utility and DWX is not an exception. It collectively assigns 55.9% of its asset base to the three preferred sectors.

The fund delivered a return of 10.2% over a period of one year.

Guggenheim S&P Global Dividend Opportunities Index ETF (NYSEARCA:LVL)

For another global fund with a high yield, investors also have Guggenheim’s LVL to consider. The product tracks the S&P Global Dividend Opportunities NR Index, a benchmark that consists of 100 stocks and ADRs that have at least $1 billion in market cap and are also high yielders.

The fund manages an asset base of $88.4 million which it invests in a holding of 107 securities. LVL has just 20.2% exposure in U.S. equities while the rest is divided mainly among European and Australian securities.

For sectors, telecom accounts for nearly one-fourth of the total, while financials and energy stocks round out the top three.

This product also charges 90 basis points a year in fees, but has slightly lower volume of about 69,500 shares a day. However, the yield on this product comes in at 6.33% in 12-month yield terms, making it a very interesting income choice.

This article is brought to you courtesy of Eric Dutram.

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