U.S. dividend stocks are strong while international dividend ETFs lag
01/15/2011 0 comments
The world is entering into a divergent environment: recently, U.S. dividend ETFs have outperformed their international developed country and emerging market counterparts. There has been a consistent pattern that U.S. equities have been strong while stocks in other parts of the world have exhibited lackluster performance.
The performance of both equity and fixed income markets largely reflects the underlying economic development: U.S. economy, while still being bogged down by its debt and high unemployment numbers, has recovered slowly. Meanwhile, euro zone economy is ladened with peripheral countries' debts and fiscal difficulties. Emerging markets, with global trade imbalance being adjusted through currency manipulation and trade restriction, have to deal with rising inflation and higher cost of living. As the largest consumer of goods in the world, U.S. is using its monetary policy to influence the rest of world. This is the start of a long period of adjustment.
For the first time in the past ten years, we are seeing 'decoupling' in a reversal fashion: the export driven economies need to slow down while the consumption driven countries need to catch up. In such a period, dividend ETFs are good vehicles in two folds: as equities, they are directly related to economic recovery while being dividend rich, they will provide cushion to the upcoming bumpy ride.
| Assets Class | Symbols | 01/12 Trend Score | 01/05 Trend Score | Direction |
|---|---|---|---|---|
| SPDR DJ Wilshire Intl Real Estate | RWX | 9.4% | 10.69% | v |
| SPDR S&P 500 | SPY | 9.39% | 10.32% | v |
| iShares Dow Jones US Real Estate | IYR | 8.76% | 10.4% | v |
| iShares MSCI Emerging Markets Index | EEM | 8.2% | 9.0% | v |
| Vanguard High Dividend Yield Indx | VYM | 7.89% | 9.04% | v |
| Vanguard Dividend Appreciation | VIG | 7.58% | 8.2% | v |
| PowerShares HighYield Dividend Achievers | PEY | 7.25% | 9.46% | v |
| iShares Dow Jones Select Dividend Index | DVY | 6.56% | 8.17% | v |
| PowerShares Intl Dividend Achievers | PID | 6.32% | 7.18% | v |
| First Trust Value Line Dividend Index | FVD | 6.15% | 6.76% | v |
| SPDR S&P Dividend | SDY | 5.86% | 7.07% | v |
| iShares Dow Jones Intl Select Div Idx | IDV | 4.9% | 5.19% | v |
| iShares MSCI EAFE Index | EFA | 4.87% | 4.89% | v |
| iShares S&P U.S. Preferred Stock Index | PFF | 3.16% | 3.77% | v |
From the table above, international REITs (RWX) trend has slowed down a bit. U.S. stocks (SPY, VYM, VIG, DVY) and REITs (IYR, ICF) have caught up and now they have very similar trend scores. International dividend stocks (IDV, EFA) are now placed close to the bottom.
Among U.S dividend ETFs, those that overweight in consumer staples (SDY, IDV) continued to lag behind those that overweight in more cyclical stocks such as financials (PEY, VYG, VIG). For more detailed performance, refer here.
labels:investmentSymbols,DVY,EEM,EFA,FVD,ICF,IDV,IWM,PEY,PFF,PID,RWX,SDY,SPY,VIG,VYM,
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