International Dividend ETFs: A Comprehensive Guide

International dividend ETFs offer a convenient way to invest in a diversified portfolio of dividend-paying stocks from around the world.

These funds typically track a benchmark index, such as the MSCI EAFE Index, which covers developed markets outside of North America and the United States.

Investing in international dividend ETFs can provide a regular stream of income and potentially lower volatility compared to individual stock investments.

Some popular international dividend ETFs include the iShares Core MSCI EAFE ETF and the Vanguard FTSE Developed Markets ETF.

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The cheapest global dividend ETFs have surprisingly low expense ratios. The Xtrackers MSCI World High Dividend Yield ESG UCITS ETF 1D has a total expense ratio of 0.25% per annum.

You can also consider the Vanguard FTSE All-World High Dividend Yield UCITS ETF, which has a total expense ratio of 0.29% per annum. This fund is available in two share classes: Accumulating and Distributing.

Here are the cheapest global dividend ETFs, ranked by total expense ratio:

The largest global dividend ETF by fund size in EUR is the Vanguard FTSE All-World High Dividend Yield UCITS ETF Distributing, with a massive 4,748 million euros.

This ETF takes the top spot, dwarfing the rest of the competition. The iShares STOXX Global Select Dividend 100 UCITS ETF (DE) comes in second, with a fund size of 2,596 million euros.

If you're looking for a fund with a significant amount of assets, the Vanguard FTSE All-World High Dividend Yield UCITS ETF Distributing is the way to go.

Here are the top 3 largest EUR funds:

The cheapest global dividend ETFs by total expense ratio are a great option for investors looking to minimize costs.

The Xtrackers MSCI World High Dividend Yield ESG UCITS ETF 1D takes the top spot with a total expense ratio of 0.25% p.a.

Another two ETFs, the Vanguard FTSE All-World High Dividend Yield UCITS ETF Acc and the Vanguard FTSE All-World High Dividend Yield UCITS ETF Distributing, both follow closely with a total expense ratio of 0.29% p.a.

There are several indices used for global dividend ETFs, each with its own methodology and selection criteria. The FTSE All-World High Dividend Yield index has 2,165 constituents and is rebalanced semi-annually.

The MSCI World High Dividend Yield ESG Reduced Carbon Target Select index has a much smaller number of constituents, with only 177 stocks, and is also rebalanced semi-annually.

Here are some key differences between the indices:

These indices have different selection criteria, with the FTSE All-World High Dividend Yield index focusing on expected dividend yield, while the MSCI World High Dividend Yield ESG Reduced Carbon Target Select index considers quality factors, dividend yield, and ESG criteria.

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The FTSE All-World High Dividend Yield index has 2 ETFs, while the MSCI World High Dividend Yield ESG Reduced Carbon Target Select index also has 2 ETFs, and the S&P Global Dividend Aristocrats index has only 1 ETF.

The number of constituents in these indices varies greatly, with the FTSE All-World High Dividend Yield index having 2,165 stocks, the MSCI World High Dividend Yield ESG Reduced Carbon Target Select index having 177 stocks, and the S&P Global Dividend Aristocrats index having 96 stocks.

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The investment universe for the FTSE All-World High Dividend Yield index includes 4,291 stocks from developed and emerging markets worldwide, excluding REITs. In contrast, the MSCI World High Dividend Yield ESG Reduced Carbon Target Select index has an investment universe of 1,397 stocks from developed countries worldwide, also excluding REITs.

The S&P Global Dividend Aristocrats index has a significantly larger investment universe of 14,542 shares from developed and emerging countries worldwide.

The index rebalancing frequency also differs between these indices, with the FTSE All-World High Dividend Yield index rebalancing semi-annually in March and September, the MSCI World High Dividend Yield ESG Reduced Carbon Target Select index rebalancing semi-annually in May and November, and the S&P Global Dividend Aristocrats index rebalancing annually in January.

Here's a comparison of the selection criteria for these indices:

The index weighting method also varies between these indices, with the FTSE All-World High Dividend Yield index using market cap (free float), the MSCI World High Dividend Yield ESG Reduced Carbon Target Select index also using market cap (free float), and the S&P Global Dividend Aristocrats index using dividend yield.

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The SG Global Quality Income index has 1 ETF and 75 constituents, while the STOXX Global Select Dividend 100 index has 2 ETFs and 100 constituents.

The investment universe for the SG Global Quality Income index includes developed countries worldwide, excluding financials, whereas the STOXX Global Select Dividend 100 index has an investment universe of 1800 stocks from developed countries worldwide.

The index rebalancing frequency for the SG Global Quality Income index is quarterly, while the STOXX Global Select Dividend 100 index rebalances annually in March.

The selection criteria for the SG Global Quality Income index include different quality factors, balance sheet valuation, and dividend yield, whereas the STOXX Global Select Dividend 100 index selects stocks based on dividend quality, non-negative payout ratio, and indicated dividend yield.

The index weighting method for the SG Global Quality Income index is equal weighting, whereas the STOXX Global Select Dividend 100 index uses dividend yield.

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You can compare all global dividend ETFs in detail or in a chart for better understanding.

The table below shows a comparison of various global dividend ETFs, including their fund size, TER, use of profits, fund domicile, and replication method.

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The STOXX Global Select Dividend 100 index contains 100 dividend stocks from developed countries worldwide, with 40 stocks from North America, 30 from Europe, and 30 from Asia-Pacific. This index uses a methodology that selects stocks based on dividend yield, dividend quality, and payout ratio.

The iShares International Select Dividend ETF tracks the Dow Jones EPAC Select Dividend Index, which is composed of 100 high-dividend yield stocks traded primarily on exchanges in non-U.S. developed markets. This fund has a 6.1% dividend yield and an expense ratio of 0.49%.

Here are some key statistics for the iShares International Select Dividend ETF and the SPDR S&P International Dividend ETF:

The S&P Global Dividend Aristocrats index has a methodology that selects stocks based on their ability to pay consistent dividends, with a requirement of at least 10 consecutive years of rising or stable dividends. This index has a large investment universe, including 14,542 stocks.

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The MSCI World High Yield ESG Select is a specific index ETF that focuses on high dividend-yielding stocks from developed countries worldwide.

This index includes 177 companies that are selected based on quality factors and dividend strength. The selection criteria include a dividend yield of at least 30% above the average of the underlying index (MSCI World index) and a non-negative dividend growth rate over the last 5 years.

The index is weighted by free float market capitalization and has a maximum weight per individual stock of 5%. This means that no single stock can dominate the index, providing a diversified portfolio.

The MSCI World High Yield ESG Select index is rebalanced semi-annually in May and November, ensuring that the portfolio remains aligned with the selection criteria.

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The Spdr S&P International Dividend ETF is a popular choice for investors seeking exposure to high-dividend-yielding stocks from around the world. This ETF tracks the S&P International Dividend Opportunities Index, which is composed of the top 100 highest dividend-yield stocks of companies headquartered outside the U.S.

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The fund has attracted $594.89 million in assets under management as of June 2020, making it a significant player in the ETF market. The expense ratio for this ETF is 0.45%.

The top three holdings in the portfolio are Enagas SA, Red Electrica Corp. SA, and Orange SA. The fund's five-year average return is negative 2%, and the dividend yield is 4.19%. The S&P International Dividend Opportunities Index has a yield-weighted methodology, meaning that the stocks with the highest dividend yields are given the most weight in the index.

Here are some key statistics about the Spdr S&P International Dividend ETF:

Canada and Japan are the most heavily represented countries in the portfolio, making up 18.9% and 11.1% of the portfolio assets, respectively. Financials, utilities, and real estate stocks combine to provide more than half of the fund's holdings.