How Risky Are International Dividend ETFs?
Don't forget about quality when investing in dividend-paying companies abroad.
The most popular domestic and international dividend exchange-traded funds are differentiated by more than just their regional exposure. The domestic ETFs with the largest share of inflow over the past year are constructed to offer total return by focusing on high-quality dividend payers. As a result, these funds tend to have yields only slightly higher than that of the S&P 500, but they outperform over time on both a total return and risk-adjusted basis. The most popular international dividend ETFs are somewhat riskier and boast dividend yields that tend to be significantly higher than that of the popular benchmark MSCI EAFE Index. These ETFs are more speculative and volatile than the quality dividend strategies that are so popular for U.S. stocks. Investors looking for total return should carefully examine international dividend ETFs to ensure they're not unwittingly taking on more risk than expected.
Abby Woodham does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.