iShares International Select Dividend ETF
Expenses: 0.5%
Dividend Yield: 4.2%
I’ve said before that “most international stock market funds are crap.” I stick by that.
If you invest in a basket of American stocks, a rising economic tide in the U.S. can lift all boats. But think about what happens when you try to shoehorn stocks from numerous countries — all with varying economic situations, and thus often different directions — into the same fund. Developed Europe might be having a boffo year, but get held back by investments in Japan or Australia. There’s simply too much room for losers to hold back the winners.
Still, if you believe in the idea that you should be geographically diversified in the event that your all-American holdings take a nap, I highly suggest doing so with income in mind, because at least then you’re not as reliant on price performance for returns.
That’s what makes the iShares International Select Dividend ETF (IDV) so attractive.
iShares’ IDV is a collection of roughly 100 high-yielding, quality international holdings from a dozen developed-market countries spanning Europe, North America and Oceania. The United Kingdom is the biggest presence in the fund, at roughly 23% of IDV’s weight, while Australia (15.7%) and France (10.5%) also enjoy double-digit exposure.
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These are names you’ve heard of, too. AstraZeneca plc (ADR) (AZN) and Royal Dutch Shell plc (ADR) (RDS.A) are among the many multinational blue chips you’ll find in this fund. Best of all, they power a dividend yield north of 4% at the moment, meaning that even if IDV mostly runs flat, you’re still getting some sort of return from your diversification backstop.