Global dividends soared to unprecedented heights last year despite the challenges posed by inflation and tight monetary policies worldwide, as reported by Reuters. This surge bodes well for exchange-traded funds (ETFs) in the upcoming year, with the ALPS International Sector Dividend Dogs ETF (IDOG) standing out as a potential beneficiary.
With expectations of falling interest rates, corporate dividends present income investors with a diversification opportunity, especially for those heavily invested in bonds. As interest rates decline in the future, reduced global borrowing costs could bolster company revenues and subsequently drive dividend payments higher.
“In 2023, corporate dividends worldwide reached an all-time high of $1.66 trillion, with a significant portion of the growth attributed to record payouts by banks,” a recent report highlighted. The report also revealed that “86% of publicly listed companies either increased or maintained their dividends,” according to the quarterly Janus Henderson Global Dividend Index (JHGDI) report, which further projected that dividend payouts could reach a new pinnacle of $1.72 trillion this year.
IDOG aims to mirror the performance of the S-Network International Sector Dividend Dogs Index (IDOGX) to the closest extent possible. With a 30-day SEC yield of 6.16% as of February 29, IDOG emerges as an attractive option for fixed-income investors seeking alternative sources of yield beyond traditional bonds, especially amidst the imminent expectation of declining interest rates.
A Distinctive Selection Method
In a bid to provide high-yielding income, IDOG employs a unique selection process inspired by the “Dogs of the Dow Theory,” implemented on a sector-by-sector basis using the S-Network Developed International Equity 1000 Index as its initial pool of eligible securities. The fund ensures high dividend exposure across ten market sectors by selecting and equally weighting the five highest-yielding securities in each sector.
Furthermore, the fund presents extensive country diversification, hunting for lucrative dividend prospects across regions like the United Kingdom, France, and the Netherlands, which collectively form its top three geographically allocated assets. Sector-wise, financials, technology, and consumer staples occupy the top positions. In line with the preferences of fixed-income seekers, the fund distributes dividends on a quarterly basis.
VettaFi LLC (“VettaFi”) serves as the index provider for IDOG, receiving an index licensing fee for its role. However, it’s crucial to note that IDOG is not issued, sponsored, endorsed, or sold by VettaFi, and the company holds no obligations or liabilities concerning the issuance, administration, marketing, or trading of IDOG.
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