The ALPS International Sector Dividend Dogs ETF (IDOG) is a compelling offering for adding exposure to international stocks with high dividends.
IDOG has rallied this year as better-than-expected economic growth and above-consensus company earnings have revived inflationary pressures, which could lead to a continued recovery in deep-value international names, according to SS&C ALPS Advisors.
Year-to-date as of March 23, IDOG returned 6%. IDOG has held steady even over a one-year period, up 0.7%, while the fund has climbed 75.1% over a three-year period. IDOG offers an annual dividend yield of 2.45%, according to SS&C ALPS Advisors.
IDOG offers exposure to international equities, excluding North America, that offer the highest dividends in each sector. IDOG, which came to market in 2013, has $191 million in assets under management and carries an expense ratio of 50 basis points. The starting universe for IDOG is the S-Network Developed Markets (ex NA) Index.
Sticky inflation coupled with global interest rates remaining higher for longer will be favorable for developed international equities as cheaper valuations offer opportunities where U.S. stocks appear expensive. According to SS&C ALPS Advisors, this is predominantly international value and cyclical sectors such as energy, financials, materials, and industrials, due to their strong pricing power.
IDOG offers approximately 63% exposure to developed countries in Europe with an equal-weighted sector exposure. The fund has a 4.16% yield across a portfolio of heavily discounted deep-value names.
See more: “Is It Time to Buy European Equities?“
IDOG’s deep-value methodology focuses on cheaper, high-yielding companies, exhibiting a 6.20x price-to-earnings (P/E) ratio compared to the STOXX 600 Europe P/E of 13.26x, according to SS&C ALPS Advisors.
During the past two decades, global growth has outpaced global value; however, forecasts anticipate that value will continue to be in favor due to higher structural inflation levels. Notably, international markets have a much greater value tilt compared to U.S. stocks, with a 47% allocation to value sectors compared to U.S. markets’ 27%, according to JPMorgan.
Other international dividend ETFs include the Schwab Fundamental International Large Co. Index ETF (FNDF) and the VictoryShares International High Div Volatility Wtd ETF (CID).
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for IDOG, for which it receives an index licensing fee. However, IDOG is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of IDOG.
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