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Int'l Dividend ETFs Outpace S&P 500 with Higher Yields
14 Oct
Summary
- International ETFs beat S&P 500 with higher yields.
- VYMI returned 24% with a 3.7% yield; IDV had 5.8% yield.
- Foreign tax credits lost in IRAs diminish income.
- Currency fluctuations can reduce dollar returns.
International dividend ETFs are demonstrating strong performance, with VYMI, IDV, and SCHY outpacing the S&P 500 in total returns and offering higher yields than the popular SCHD fund. Specifically, the Vanguard International High Dividend Yield ETF (VYMI) returned 24% with a 3.7% yield, while the iShares International Select Dividend ETF (IDV) offered the highest yield at 5.8%.
The Schwab International Dividend Equity ETF (SCHY) also showed competitive performance. These funds deliver more income due to sector composition favoring energy, banks, and tobacco, and different payout cultures. However, investors face potential challenges including currency exchange rate fluctuations, which can erode dollar returns, and the loss of foreign tax credits when holding these ETFs within an IRA.
Furthermore, dividend payments can be uneven quarter to quarter due to varying company payout schedules. Despite these complexities, VYMI is noted for its broad reach and low fees, IDV for its income potential in taxable accounts, and SCHY for applying a quality screen similar to SCHD to international markets.
