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Finding the
World's Best Double-Digit Yield
Producers
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Published:
September 1, 2008
Launched by
First Trust in 2007, First Trust DJ Global Select Dividend (AMEX: FGD, $23.22) mirrors the Dow Jones Global Select
Dividend Index. This equity income benchmark tracks stocks trading
within the world's 24 largest developed markets, weeding out those
that pay little or no dividends.
To tighten the criteria, prospective members must also have a
current dividend that is equal to or greater than its five-year
average -- which means that components are likely raising their
payouts rather than lowering them. Finally, for added stability,
companies must also have reasonable payout ratios below 80%; those
paying out a greater percentage are generally more susceptible to
dividend cuts if profits begin to decline.
The end result is a portfolio of 100 companies showcasing some of
the safest and most generous dividend distributions on the planet.
Not surprisingly, most of these reside outside the U.S. So while
solid domestic companies like Altria (NYSE: MO) are included, the
bulk of the portfolio (85%) is invested outside the U.S. in
higher-yielding foreign companies such as Macquarie Infrastructure
(NYSE: MIC) and Canadian Oil Sands Trust. As with most equity income
funds, financials soak up a large percentage of assets (above 40%).
So readers who already own a financial sector fund may want to be
cautious about potential overlap.
Australia currently gets top billing at nearly one-quarter of the
fund's assets, while Great Britain, Canada and Hong Kong are also
well represented.
Just as dividend-paying stocks have traditionally outperformed
non-payers in the U.S., the numbers tell a similar story overseas.
Heading into 2008, The DJ Global Select Dividend Index had topped
the DJ World Developed Markets Index in seven of the prior eight
years -- and by no small margin either.
In fact, between the end of 1998 through June 2008, a $10,000
investment in the Global Select Dividend Index would have tripled to a current
value of $35,200 -- about $20,000 more than the same amount invested
in the broader Developed Markets Index.
Fortunately, this fund has been marked down in the recent market
retreat and is now trading below $24 per share. So
now, its steady quarterly payouts of $0.68 per share equate to a
rich yield of 11.7%
-- up from just 8% last December.
FGD is a great fund trading at an attractive price. And if you're
looking for a low-cost, tax-efficient portfolio of global
dividend-paying stocks -- this is it.
Nathan Slaughter
Editor
The ETF Authority
About
The ETF Authority
The mission of The ETF Authority
is to help our readers identify today's most profitable ETFs and closed-end
funds. (Learn
More)
About Nathan Slaughter
Nathan Slaughter has developed a long and successful track
record over the years by investing in both exchange-traded funds (ETFs) and
deeply discounted value securities. When it comes to ETFs, Nathan has
created a proprietary ranking system that helps him zero in on today's most
promising funds.
Nathan's previous experience includes a long tenure at
AXA/Equitable Advisors, where he provided comprehensive investment advisory
services to small businesses and high net-worth clients. He also honed his
research skills at Morgan Keegan, where he performed asset allocation,
retirement planning, and consultative portfolio management services.
Several years ago Nathan switched gears and decided to devote
his time exclusively to financial analysis and writing. He has since published
hundreds of articles for a variety of prominent online and print publications,
and he now writes exclusively for StreetAuthority.com.
Nathan's educational background includes NASD series 6, 7, 63,
& 65 certifications, as well as a degree in Finance/Investment Management.
He currently resides in Shreveport, LA with wife Julie and sons Aidan and Riley.
To learn more about Nathan Slaughter's premium investing newsletter -- The
ETF Authority -- please
visit
this link.
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If you have cash in any of
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