What’s Inside The Top International Dividend ETFs - InvestingChannel

What’s Inside The Top International Dividend ETFs

Proprietary Data Insights

Top International Dividend ETF Searches This Month

Rank Ticker Name Searches
#1 VIGI Vanguard International Dividend Appreciation Index Fund 434
#2 PID Invesco International Dividend Achievers ETF 68
#3 IGRO iShares International Dividend Growth ETF 64
#4 DWX SPDR S&P International Dividend ETF 41
#5 FID First Trust S&P International Dividend Aristocrats ETF 23
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What’s Inside The Top International Dividend ETFs

The Juice spends a lot of time looking inside all types of ETFs. Because we’re generally fond of dividends, we often focus on dividend ETFs. 

Most recently, we looked inside of what is always the most popular dividend ETF in our Trackstar database, the Schwab US Dividend Equity ETF (SCHD), as well as runners up, at least in terms of search interest, the Vanguard High Dividend Yield ETF (VYM) and the Vanguard Dividend Appreciation ETF (VIG)

With these three names, you can do a solid job diversifying across the universe of domestic dividend-paying stocks. While these ETFs provide nice exposure to tech stocks, the sector is hardly overrepresented. 

As we noted when we looked inside the most popular small cap ETF in Trackstar, the iShares Russell 2000 ETF (IWM), we don’t look at small cap stocks enough. While, on one hand, you could argue there hasn’t been a need to, diversification isn’t about riding hot spaces too hard. Most long-term investors are in marathons, not sprints. So it makes sense to not pay too much attention to the talking heads on CNBC who speak about “rotating” in and out of different classes of stocks. 

To a similar end, with dividend stocks (maybe) about to come back into favor if and when interest rates drop, it makes sense to look beyond domestic dividend ETFs and consider the composition of international ones. Should an important area of the market, especially if it’s filled with quality companies, ever be off of your radar? 

Good question. You don’t have to answer it. 

So, as we build a solid library of what’s inside a whole slew of ETFs, let’s do it with the international dividend payers. 

Tops on the list of the most searched names across the platforms of our 100+ financial media partners is the Vanguard International Dividend Appreciation Index Fund (VIGI)

VIGI is a passive, smart-beta ETF that tracks the S&P Global Ex-U.S. Dividend Growers Index. Recall what smart beta means. While the ETF is passive, the index it mimics is — for all intents and purposes — actively constructed. 

VIGI has a low expense ratio of 0.15%, typical of Vanguard index funds. 

Nearly half of the fund (48.3%) is invested in European equities, with 29.5% in the Pacific region, 12.6% in North America and 9.6% in emerging markets. The biggest market for the ETF is Japan (25.2%), followed by Switzerland (16.4%), Canada (12.6%), the UK (10.3%) and India (6.3%). The largest European Union exposures in the fund are Germany (5.8%), Denmark (5.6%), France (5.5%) and Sweden (2.2%). 

In terms of stocks, the top ten holdings make up nearly 33% of the ETF, which actually owns more than 340 stocks, as of May 2024. So, if you own VIGI, you’re overweight these names, which include the top holding Danish pharmaceutical firm Novo Nordisk (NVO) and German software company SAP (SAP)

The second most popular international dividend ETF on our Trackstar list, the Invesco International Dividend Achievers ETF (PID), is interesting in that it tracks the NASDAQ International Dividend Achievers Index, which is made up of companies that have increased their dividend payments for at least five straight years. 

PID has an expense ratio of 0.53%. And it has a very different makeup than VIGI. 

More than half of the fund’s holdings (55.5%) come from Canada, followed by the UK (11.9%), the United States (5.2%), Spain (5.0%) and Japan (4.6%). You’ll also get exposure to Mexico, the Philippines, Switzerland, South Africa and India. 

More than 62% of the stocks in PID are in the utilities (20.6%), financials (15.3%), communication services (13.5%) and energy (12.9%) sectors. 

The fund’s top ten holdings account for more than 41% of the relatively small 48-stock portfolio. UK-based Atlantica Sustainable Infrastructure (AY) is the top holding. Other names in the top ten include Canadian bank Canadian Imperial Bank of Commerce (CM), Canadian telecoms Telus Corp (TU) and BCE Inc (BCE) and Canadian energy firm Enbridge (ENB)

So, you get some cross-sector exposure, which is especially attractive if you like Canada. 


The Bottom Line: The point of these looks inside popular ETFs isn’t necessarily to suggest you buy one or all of them. Instead, it’s to show that before you buy an ETF, you have to see the stocks it holds. Sometimes you might not want any part of the portfolio. By comparing different ETFs that invest in the same broad space, you might find significant differences in terms of holdings. Like we did today. 

Both of these factors can help ensure you’re not only in the right ETF with stocks you’re comfortable owning, but that a strategy of buying more than one ETF can work if your goal is diversification within a relatively large universe of companies.

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