The SPDR® S&P Global Dividend ETF (NYSEARCA:WDIV) is a fund that focuses on international dividend stocks, with a significant portion of its portfolio coming from the U.S., Canada, and Japan. Despite offering a dividend yield of about 4.7%, slightly higher than the 10-year treasury rate, WDIV has shown inferior total returns compared to other international dividend growth funds over the past decade. This may lead investors to explore alternative dividend funds.
WDIV tracks the S&P Global Dividend Aristocrats Index, which includes stocks that have consistently increased or maintained stable dividends for at least 10 consecutive years. The fund’s portfolio is concentrated in three countries, with the U.S., Canada, and Japan making up a significant portion. Despite this concentration, WDIV’s heavy focus on developed countries with stable political and economic environments may provide some reassurance.
The fund’s emphasis on stable dividend-paying stocks has resulted in relatively consistent dividends over the years, with dividend yield typically ranging between 3.6% and 5%. However, WDIV’s total returns have been lackluster, with a negative price return since its inception in 2014 and a total return significantly lower than other international dividend growth funds.
The portfolio construction methodology of WDIV, which prioritizes higher-yield stocks that may have limited growth potential, could be a contributing factor to its underperformance. In contrast, funds like IGRO and VIGI focus on owning stocks with a history of increasing dividends or potential for future growth, leading to better total returns over time.
Foreign exchange rates and U.S. treasury rates can also impact WDIV’s price performance, with a strong U.S. dollar potentially compressing the fund’s price. The current rising treasury rate has affected WDIV’s performance, but a potential shift in the Federal Reserve’s monetary policy could lead to improved performance.
In conclusion, while WDIV offers a decent dividend yield, its total returns and portfolio construction may not be as attractive as other dividend funds. Investors may want to consider alternative options for better long-term growth potential. As always, it’s important to seek financial advice from professionals before making any investment decisions.