International Dividend ETFs

International stocks now yield about twice as much as U.S. domestic stocks, says S&P’s international equity strategist Alec Young, and should be in high demand during 2011 as investors weigh the effects of fiscal austerity programs in Europe such as the one recently announced in the United Kingdom and tighter monetary policy in China and other emerging markets.One asset class that Standard & Poor’s Equity Research believes offers both attractive yields as well as potential for further growth is international dividend stocks.

As of late 2010, there are about two dozen exchange traded funds (ETFs) focused on international dividend-paying companies, each with its own characteristics. They offer exposure to markets on a global, international (ex-U.S.), or regional basis, including some divided by market capitalization as well. New-York-based WisdomTree is the most prolific issuer of international dividend ETFs, with 13. It is worth remembering that dividend ETFs, both foreign and domestic, are structured slightly differently than most other equity ETFs. Rather than being weighted according to market cap, international dividend ETFs track indices that are weighted according to either their yield or the cash actually paid in dividends.

Source: AdvisorOne

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