With the U.S. economy facing brewing headwinds despite inflation slowing by some metrics, it may be time to look abroad. U.S. investors have had a significant domestic bias of late, which may privilege those investors who lead the way abroad rather than follow.
That said, international investing has its own challenges that may point to an international dividend ETF, specifically. A strategy like the ALPS International Sector Dividend Dogs ETF (IDOG), may bring certain key advantages to foreign investing.
The international dividend ETF tracks an equal-weighted index that chooses the five firms with the highest dividend yield in each of the 10 GICS international market sectors. The index applies the “Dogs of the Dow” strategy to a global stock universe except U.S. and Canada stocks. By putting 50 stocks together with five from 10 sectors, it looks to eliminate countercyclical sector biases in traditional dividend strategies that overweights areas like utilities or financials.
So what kind of stocks does IDOG hold, then? It holds some steady names such as, for example, Sanofi (SNY). Sanofi, a French multinational pharmaceutical and healthcare firm, develops and markets drugs focused on oncology, immunology, cardiovascular disease, and more. The firm has seen 11.6% return on equity YTD and has a solid 18.7 P/E ratio per YCharts. SNY has a 3.5% dividend yield.
Speaking of diversification, it also holds Japan Tobacco, Inc. (JAPAY). The firm started in 1985 and is the third largest tobacco firm worldwide. It owns big brands like the non-U.S. versions of Camel and Winston. The company has seen a 12.8% YTD return on equity and a 6.6% dividend yield per YCharts.
Taken together, firms like those have helped the international dividend ETF IDOG return a robust 33.4% over the last year and 12% YTD. Charging 50 basis points (bps), the strategy may appeal to those investors looking to diversify into foreign equities.
