3 Issues With International Dividend Yield ETFs (DWX, IDV)

Oct 04, 2023 By Triston Martin

International Dividend Exchange-traded funds focus on stocks from countries other than the U.S. that pay dividends. This is true of both well-known markets and new ones. Depending on their mandates, ETFs invest in a wide range of market caps and industries. But the funds won't put money into both new and old markets. They will only put their money into one of the two. International Dividend Yield Exchange-traded funds are a new asset used as an investment. Such Exchange-traded funds track indexes that are made up of global businesses that pay high dividends to investors all over the world. So what are 3 issues with international dividend yield ETFs (dwx, idv)? Let us explore here.

Learn about International Dividend Yield ETFs.

In 2014, Vanguard did research that showed that 51% of all stocks were not from the United States. The research also showed that the MSCI global index, which includes developing and developed markets, was the least volatile between 1988 and 2013. Several of these funds have come out for the first time in the last few years. DWX (SPDR S&P International Dividend Fund), for example, has annual fees of 0.45% and yields of more than 5%.

In the same way, IDV (iShares International Select Dividend) Yield has returns of above 5.9% and costs of 0.5%. Two other international yield funds are Global X SDIV (SuperDividend) and FGD (First Trust Dow Jones Global Select Dividend Fund). Vanguard also released two fund groups that invest in international stocks that pay dividends. The Vanguard International High Dividend Yield Index Fund and the VIDAIF (Vanguard International Dividend Appreciation Index Fund), respectively, follow the FTSE All-World ex-US High Dividend Yield Index and the NASDAQ IDASI (International Dividend Achievers Select Index).

Considerations When Evaluating International Dividend Yield Funds

Morningstar Research Inc. says that the returns of these funds can be changed by three things.

  1. The first is giving countries to people. The fund's risk can change if it focuses on countries where companies have a history of giving out high dividends. Most of the time, Australian companies with high weightings pay out high dividends. So, how well the fund does depends on how much it is tied to that country's economy. In the same way, Japanese companies have a history of giving out low dividends and only make up a small part of these funds.
  2. The second thing to think about when judging these funds is the exchange rates. Dividends are paid out in local currencies, which must be converted to U.S. dollars (or the local currency of the fund's home base) so that returns can be calculated. In recent years, the Australian dollar has lost value compared to a rising dollar, as shown in the above example. This has hurt the returns of ETFs, which track indexes with a lot of money invested in the country. Morningstar research shows that the underweighting of Japanese stocks in iShares Select Dividend hurt the fund because Japanese stocks went up from 2013 to 2015.
  3. The third thing to think about is how dividend yields affect taxes. Capital gains must be taxed in the country where the money was invested. Most of the time, when investors get money back from other countries, they get tax credits for it. When the account is a Tax-Advantaged Account, they don't have to pay taxes on the money.

How Can I Invest in Dividend Equities All Around The World?

Dividend ETFs might be appealing to investors who are more careful with their money or who are more interested in getting cash flow for retirement. Investors who are willing to take risks and want to make the most money overall may do better with smaller growth stock funds that have the potential for higher capital gains.

People think that stocks with a lot of dividends are good investments. Most companies that have been around for a while and are doing well pay dividends. Dividend stocks can be a good way for investors to get a steady income stream when low-interest rates. There are different ways to use indexes when investing in ETFs that hold high-dividend stocks worldwide. This Investment Guide for Global Dividend Stocks will help you tell the most important indices apart and pick the best ETFs that track the most important indices for global dividend stocks.


Investors interested in participating in overseas markets now have the opportunity to do so thanks to exchange-traded funds known as international dividend yield ETFs. However, before investing in these funds, one has to consider the fund's nation allocation, currency exposure, and the tax consequences of the investment.

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