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3 Great International Dividend ETFs for 2024

These options strike a nice balance between risk and reward.

3 Great International Dividend ETFs for 2024

Daniel Sotiroff: Dividend ETFs are a popular group, largely for the regular income they throw off. And international markets are a ripe hunting ground. Stocks from foreign markets offer higher payouts than their US counterparts, so you get a little more yield out of dividend ETFs that go abroad.

3 Great International Dividend ETFs for 2024

  1. Vanguard International High Dividend Yield ETF VYMI
  2. Schwab International Dividend Equity ETF SCHY
  3. Vanguard International Dividend Appreciation ETF VIGI

The first ETF for today is Silver-rated Vanguard International High Dividend Yield ETF, more commonly known by its ticker VYMI. Simplicity is a virtue with this ETF. It follows a straightforward process, simply sorting international stocks by their expected dividend yield and holding the higher-yielding half. That leads to a broadly diversified portfolio of more than 1,000 dividend-paying stocks.

This is one of Morningstar’s top-rated international high-dividend ETFs, and it delivers a reasonably higher yield than the broader foreign stock market. Its trailing 12-month yield was about 4.6% at the end of January, or around 1.3% higher than the international market.

Even if you’re not looking for a dividend fund, VYMI’s broad portfolio and exceptionally low 0.22% expense ratio really set it apart from many of its peers as a solid value strategy.

Silver-rated Schwab International Dividend ETF, which trades under the ticker SCHY, is another great option if you’re looking for a high-dividend-yield ETF. This ETF isn’t as broad as VYMI. It holds only 100 stocks, but it walks a tight line between two competing forces. It aims for higher-yielding stocks while also ensuring the names that it holds are profitable and have the capacity to continue making dividend payments in the future. That means SCHY’s dividends are not only reasonably high but also more sustainable than other high-dividend-yield ETFs.

SCHY should have a higher yield than the market. But its emphasis on high-quality dividend payers will put a dent in its overall yield, so it won’t yield quite as much as VYMI. Its trailing 12-month yield was about 4% at the end of January.

Gold-rated Vanguard International Dividend Appreciation ETF, ticker VIGI, is the third ETF today. It’s a little different from VYMI and SCHY—you shouldn’t expect a higher yield from this ETF. Instead, it looks for foreign stocks that have consistently grown their regular cash dividend payments for seven years or more, and it forgoes those that are most likely to cut dividend payments in the near future.

Seven years of consistent dividend growth is a strict hurdle that pulls VIGI toward well-managed shareholder-friendly companies. It skews toward names trading at higher multiples and lower dividend yields. The upside is that the ETF tends to hold highly profitable stocks that not only have the capacity to make dividend payments but also a willingness to do so. It delivers a diverse portfolio of stocks that consistently grow their earnings and consistently pay out dividends. Dividend yield aside, it’s lived up to expectations and should be an excellent long-term investment.

Watch Outlook for Vanguard in 2024 for more from Daniel Sotiroff.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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