RSSThe Best International Sectors Based Upon Dividend Trends
By Gary Gordon | July 01, 2009 | 6:21 PM | 0 Comments
Paul Amery writing for Index Universe wrote a fascinating piece on dividend trends in European markets. In fact, those dividend trends likely mirror changes in company distributions clear across developed market segments.
Some findings come as no surprise; that is, the once lofty expectation for 7%-8% yield from European banks has been cut by half. (And that's not saying anything about the extreme depreciation of bank shares over the last 3 years.)
| DJ Stoxx 600 Approximate Dividend Payouts By Sector | ||||||
| June '06 | Sep '08 | June '09 | ||||
| International Energy | 4.0% | 4.5% | 5.0% | |||
| International Utilities | 3.5% | 5.0% | 5.0% | |||
| International Technology | 1.8% | 2.5% | 2.0% | |||
| International Consumer Goods (Excl Auto) | 2.5% | 3.5% | 3.0% | |||
| International Telecom | 5.0% | 6.5% | 5.7% | |||
| International Basic Materials | 3.7% | 3.8% | 2.7% | |||
| International Healthcare | 2.5% | 3.0% | 2.5% | |||
| International Financials (Banks) | 7.5% | 8.0% | 3.8% | |||
Of the 8 DJ Stoxx sectors that I identified here, only 2 provide the cherished trait of a steadily increasing payout (i.e., Oil/Gas via Energy and Utilities).
There are a number of ETFs that may capture this consistency of income. In the utilities arena, you have iShares S&P Global Utilities (NYSE: IXC), SPDR International Utilities (NYSE: IPU) and WisdomTree International Utilities (NYSE: DBU).
There's a bit of irony worth noting, however. So far in 2009, utilities have been the worst performers of any economic segment, with capital depreciation in the double digits. In contrast, one of the least reliable sources of income has been in the basic materials arena. And yet, "materials" have the largest gains in terms of capital appreciation.
Clearly, many investors hope to balance a reliable income stream with a reasonable potential for appreciation. Telecom has been consistent with its income, but shaky on its potential for growth. Meanwhile, technology has been solid in terms of capital appreciation in 2009, yet the 2% yield may be less desirable for income seekers.
The hands-down winner over the last 3 years? "International Energy" a la oil and gas. The dividend yield has shown steady growth and is currently near 5% per year. ETFs that may capture this capital appreciation/consistent income combo include iShares S&P Global Energy (NYSE: IXC), SPDR International Energy (NYSE: IPW) and WisdomTree International Energy (NYSE: DKA).
If you'd like to learn more about ETF investing... then tune into "In the Money With Gary Gordon." You can listen to the show "LIVE", via podcast or on your iPod.
Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.
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