Best stocks to invest in – Earn 4% Yield with These Dividend ETFs



Best stocks to invest in

The U.S. markets may have gained strength to start Q3, but could not cheer up investors fully. Global growth slowdown, uncertainty over the Fed rate hike, the yet-unseen impact of Brexit and oil price volatility sustained risk-off sentiments even in the latest bull market, when the big U.S. indices hit several highs.

This in turn has kept U.S. Treasury yields at extremely low levels. Yield on 10-year Treasury notes hovered around 1.55% as of August 23, 2016. Naturally, investors’ thirst for yields grew.

However, while the Fed is looking to tighten policy sooner or later, international dividend picks have lately gained strength. The wave of easy money polices across the globe, be it in Europe or Asia, and negative interest rates in a number of economies including the Euro zone and Japan have brightened the appeal for dividend investing.

Recently, an adviser to Prime Minister Shinzo Abe also indicated that Bank of Japan (BoJ) may take “bold monetary easing measures.” All in all, several economies across the globe joined the bandwagon of accommodative monetary policy to attain favorable terms of trade and fight low inflation (read: Japan’s Economy Slowed in Q2: ETFs in Focus).

In such a low yield backdrop, investors looking for steady current income shifted their focus to high dividend stocks. These cash payouts can safeguard one’s portfolio in bear market movements.


Below we highlight a few international ETFs that yield around 4% and witnessed strong capital gains in the last one month (as of August 23, 2016). Investors should also note that these international dividend ETFs beat Global X SuperDividend US ETF DIV and the S&P 500-based SPY in the last one-month frame.

Global X SuperDividend ETF SDIV
 
This ETF provides exposure to 101 high yield stocks from around the world with each holding less than 1.85% of assets each. REIT firms take the top spot at 27.3% followed by mortgage REITs (19.4%) and financials (13.0%).
 
From a country look, about 47.7% of the portfolio is allocated to America followed by 17.5% invested in Australia. Expense ratio comes in at 0.58%. The fund pays a solid dividend yield of 6.69%.

First Trust Dow Jones Global Select Dividend Index Fund FGD  

 The fund tracks the Dow Jones Global Select Dividend Index, providing exposure to the 98 highest-yielding stocks. From a sector look, financials take the top spot at 34.94% while industrials, telecom, consumer discretionary and energy round off the next four spots with double-digit exposure each (read: High Income ETFs Worth Their High Costs).
 
In terms of country profile, Australia, U.S. and Canada occupy the top three positions. Expense ratio comes in at 0.58%. FGD has 4.79% in annual dividend yield.

Guggenheim S&P Global Dividend Opportunities Index ETF LVL

This ETF follows the S&P Global Dividend Opportunities Index which focuses on high yielding securities from around the world. As many as 106 securities are chosen for inclusion, with heavy exposure to the energy and financials securities. American stocks account for roughly 25% of total assets. The fund yields about 4.94% annually and charges 64 bps in fees.

 SPDR S&P International Dividend ETF DWX

The fund is highly exposed to financials (24.6%), utilities (20.5%) and energy (18%). Australia takes the top spot in the fund (23.8%) followed by Canada (14.4%) and the U.K. (12.9%). The fund yields about 4.48% and charges about 45 bps in fees.

iShares International Select Dividend ETF IDV

The fund has heavy exposure to Australia (20.5%) and the U.K. (20.2%). The ETF has nearly 30% of its assets in financials, and then about 11.4% in utilities, and around 10% in energy. IDV has a truly impressive yield of about 5.28%. It charges 50 bps in fees (read: New International Dividend Growth ETF by iShares in Focus).

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SPDR-SP 500 TR (SPY): ETF Research Reports
 
FT-DJ GL SEL DV (FGD): ETF Research Reports
 
GLBL-X SPRDV US (DIV): ETF Research Reports
 
GLBL-X SUPERDIV (SDIV): ETF Research Reports
 
SPDR-SP INT DIV (DWX): ETF Research Reports
 
GUGG-SP GLBL DV (LVL): ETF Research Reports
 
ISHARS-INTL SD (IDV): ETF Research Reports
 
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Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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