Global Dividend Payments Upbeat in Q2: ETFs to Benefit – August 30, 2017

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Global stock dividend payments increased 5.4% year over year to $447.5 billion in Q2, according a report released by Janus Henderson Group Plc. For 2017, dividends are forecast to hit a record $1.21 trillion, up 3.9% year over year. A sturdy rebound in global economic growth is credited to this milestone.

Underlying dividends — barring special dividends and adjusting for currency movements and other factors — jumped 7.2% year over year in Q2, reflecting the healthiest quarterly performance since late 2015.

As per an article published on Bloomberg, payouts touched records in the U.S., Japan, Switzerland, the Netherlands, Belgium, Indonesia and South Korea in the second quarter. In Europe, underlying growth rose 5.8%, with 86% of companies either hiking or holding their dividend on a year-over-year basis.

As per an analyst, Japanese firms are turning more shareholder-friendly. Plus, “improved corporate governance in markets like South Korea – where Kospi index heavyweight Samsung is hugely increasing its the percentage of profits returned to investors” has played into rising global dividend payments.

The financial and technology sectors were leaders in the move. Financial institutions made up about half of global dividend growth in the quarter, as per the Janus Henderson report, with bank dividends rising about 9% year over year to $58.4 billion. Industrials and basic materials sectors also showed decent growth.

Against this backdrop, a look at international dividend aristocrats – which are more stable, mature and profitable companies consistently raising dividends or going for high payouts – could be lucrative. This is especially true given that dividend aristocrats are generally apt for quality investing (read: Dividend ETFs Explained: What Investors Need to Know).

Below, we highlight a few dividend growth ETFs which may give a relatively stable performance in the coming months should there be any eruption of geopolitical risks (read: Low Volatility ETFs Surge Amid Trump and Fed Worries).

PowerShares International Dividend Achievers (PID Free Report)

This international fund gives exposure to stocks with successive years of dividend growth. Canada (35.2%) and U.K. (26.2%) are the top countries of the fund. Financials (22.7%), Energy (22.7%), Industrials (13.1%) and Telecom Services (12.8%) take the top four spots in the fund. It yields 3.70% annually (read: 4 High Dividend ETFs Under $20).

iShares International Dividend Growth ETF (IGRO Free Report)

The fund provides exposure to international companies with a history of consistently growing dividends. The fund seeks to invest in global companies with healthy balance sheets and dividend growth potential.
 
It has a net expense ratio of 0.22%. From a sector point of view, Financials dominates the fund with about 22% exposure, followed by Health Care and Consumer Staples with 15.5% and 14.8% allocation, respectively.

Vanguard International Dividend Appreciation ETF (VIGI Free Report)

The underlying index of the fund – the Nasdaq International Dividend Achievers Select Index – focuses on high-quality companies located in developed and emerging markets, excluding the U.S., that have both the ability and the commitment to grow their dividends over time. Europe takes the top spot with about 44.7% exposure followed by emerging markets with 22.6% share.

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