In a global economy, today's investors need exposure to international equities to take advantage of the growth and dividend income that they provide. Global High-Yield Dividend ETFs provide a great way to invest in international equities without the elevated risk of unknown individual corporations in overseas markets. A lot of international equities pay a handsome dividend and provide fantastic investment returns, so an investor who does not have access to buy them directly can gain access to these corporations via the following ETFs.
In my hunt to increase my current income coupled with a need for global diversification, I started exploring options for International Dividend ETFs. The largest and most popular ETFs with the juiciest yield are listed below. All holdings in the funds discussed below are in equities.
- Global X SuperDividend ETF (SDIV, Financial) tracks the performance of 124 equally weighted companies that rank among the highest dividend yielding equity securities in the world.
- Guggenheim S&P Global Dividend Opportunities Index ETF (LVL, Financial) is comprised of 101 common stocks, MLPs and ADRs that offer high dividend yields chosen from countries included in the S&P Broad Market Index. The constituents consist of stocks, MLPs and ADRs with market cap greater than $1.5B.
- SPDR S&P International Dividend ETF (DWX, Financial) includes 116 companies with a biased weighting towards mid-to-large cap.
| Fund Name | Ticker | MER % | Yield % | No of Holdings | Market Cap Breakdown Mega-Large-Mid-Small-Micro % |
|---|---|---|---|---|---|
| Global X SuperDividend ETF | SDIV | 0.58 | 6.55 | 124 | 9.2 - 17.2 - 45.1 - 19.5 - 5.14 |
| Guggenheim S&P Global Dividend Opportunities Index ETF | LVL | 0.60 | 6.52 | 101 | 10.1 - 24.6 - 50.6 - 12.8 - 1.75 |
| SPDR S&P International Dividend ETF | DWX | 0.45 | 6.76 | 116 | 15.2 - 33.73 - 43.47 - 2.05 - 0 |
Geographic Allocation
SDIV has a slight inclination towards equities based in the U.S. with a 27% allocation. The other two funds have highest fund allocation in Australia with DWX completely invested in non-U.S. equities. All funds have the highest regional allocation to Europe with SDIV at 32.59%, LVL at 35.14% and DWX at 39.93%.
| ETF | US / Intl Allocation % | Developed / Emerging % | Top Allocation |
|---|---|---|---|
| SDIV | 27 / 72 | 94.34 / 4.06 | USA (27%) |
| LVL | 16 / 83 | 86.89 / 13.07 | Australia (20%) |
| DWX | 0 / 99.85 | 83.31 / 14.44 | Australia (22%) |
Sector Allocation
SDIV's largest sector allocation is in Real Estate. Both LVL and DWH have largest sector allocation in Communication Services. For the most part, LVL and DWH have very similar sector weightings.
| Sector | SDIV % | LVL % | DWH % |
|---|---|---|---|
| Financials | 19.05 | 15.23 | 14.73 |
| Industrials | 9.79 | 9.73 | 12.17 |
| Materials | 2.8 | 6.51 | 4.92 |
| Energy | 5.13 | 12.79 | 12.59 |
| Real Estate | 21.76 | 9.6 | 9.01 |
| Cons Cyclical | 5.34 | 6.71 | 6.13 |
| Cons Defensive | 2.67 | 4.42 | 1.41 |
| Comm Services | 11.62 | 18.37 | 17.51 |
| Technology | 2.68 | 0 | 0.66 |
| Healthcare | 4.81 | 3.12 | 2.75 |
| Utilities | 12.74 | 13.48 | 14.23 |
Metrics to Judge By
Metrics such as sector allocation, number of holdings, expense ratio fees, annual yield, market cap size exposure etc need to be considered before I make a final decision on the ETF to pick.
- Number of holdings: When investing in ETFs, I like broader indices and look for more holdings as I like to mitigate risk. SDIV has the highest number of holdings with 124 equities in total. Winner: SDIV.
- MER: I like to keep my costs down — simple as that. Winner: DWX.
- Yield: I have already dropped a couple of names from this list of global dividend ETFs yielding less than 2%. Since most of the funds yield the approximately same, this will be a tie on the yield metric Winner: Tie.
- Geographic Allocation: I am already invested in a lot of U.S. stocks and the point of this exercise is to look for international diversification. I would want higher non-US exposure. Winner: LVL and DWX.
- Sector Allocation: I like more balanced funds. SDIV is very concentrated in Financials with an allocation of almost 40% Financials and Real Estate. Winner: LVL and DWX.
- Distribution frequency: I like to see the distributions paid out frequently. SDIV pays on a monthly schedule whereas LVL and DWX pay on a quarterly schedule. Winner: SDIV.
- Stable Income: The objective of this exercise and the potential holding needs to provide a stable income stream. Although all funds have the same annual yield rate, SDIV is the only fund that has the same stable payment month after month. Both LVL and DWX have a variable pay amount for each quarter. Winner: SDIV.
Final Score: Based on the metrics above, giving a point for each metric we get: SDIV = 4. LVL = 3. DWX = 4.
I am still undecided which one offers the best rewards, but I like DWX even though it loses on the points of number of holdings, distribution frequency and stability of income, the ETF has the lowest fee, good geographic allocation with a decent exposure to emerging markets (which SDIV lacks) and the overall sector allocation.
What do you think of these Global High-Yield Dividend ETFs? Do you own any of these ETFs in your portfolio? What are your thoughts on the metrics discussed above? I would love to hear your thoughts on these ETFs. Leave a comment below to start a discussion.
Disclosure: None. My full list of holdings can be found here.
This article first appeared on roadmap2retire.com
