Emerging markets equities and the related broad-based ETFs are building on momentum accrued last year. They’ve delivered impressive performances again in 2026. That’s the good news.
The challenge lies in the fact that some of the largest emerging markets ETFs skimp on equity income. For example, the MSCI Emerging Markets Index sports a trailing 12-month dividend yield of just 1.89%. Sure, that’s far ahead of the S&P 500, but dividend investors can do better with the ALPS Emerging Sector Dividend Dogs ETF (EDOG ).
EDOG’s dividend yield is nearly 300 basis points ahead of the MSCI gauge. The ETF’s income advantage is easily understood. It’s underlying index takes the five highest-yielding stocks from 10 of the 11 global industry classification standard (GICS) sectors (real estate is excluded) and equally weights those stocks. The 10 sectors are also equally weighted in EDOG, ensuring sector and single-stock concentration is benign in this fund.
Go to Where the Economic Growth Is
EDOG’s methodology results in a lineup that has a defensive value feel. However, that doesn’t mean the ETF isn’t exposed to encouraging economic growth trends in developing economies. Data confirms these trends are apparent today.
“There is a myriad of reasons to consider constructing an emerging markets (EM) portfolio from a long-term perspective, including numerous economic and demographic advantages – they are the chief drivers of overall global growth, accounting for 61% of global GDP in 2026,” according to BNP Paribas.
Themes such as increased industrialization and the rise of the emerging markets consumer may also be long-term catalysts for EDOG. The ETF allocates approximately 30% of its weight to industrial stocks and the two consumer sectors. The ETF’s consumer exposure is potentially relevant to long-term investors. As BNP Paribas points out, by 2030, 75% of emerging markets consumers will be in the 15 to 34 age cohort. That indicates EDOG has some leverage to favorable demographic trends.
Another point in favor of EDOG is that the fund isn’t heavily dependent on Chinese stocks. In fact, China accounts for just 7.36% of the fund’s geographic exposure.
“Investors with a higher level of conviction in the growth potential of companies based outside of China may therefore prefer the proportionate exposure of an index, or investment strategy, which contains a greater percentage of opportunities elsewhere in the EM universe,” adds BNP Paribas.
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VettaFi LLC (“VettaFi”) is the index provider for EDOG, for which it receives an index licensing fee. However, EDOG 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 EDOG.
