Stock Markets

Seeking Dividends from Overseas

Many investors actively seek out companies with high dividend yields because of several unique advantages, such as providing a source of steady income, offering reduced comparative risk, etc.

One example is the Fidelity International High Dividend ETF (FIDI), which is an exchange-traded fund (ETF) exclusively built to maximize gains from dividends. As a twist, however, FIDI holds a portfolio of 100 large- and mid-cap high-yielding stocks from developed markets that do not include the United States.

As a relatively new fund with an inception date of January 16, 2018, FIDI was designed by Fidelity Investments to cater to “an increased interest among Fidelity clients” who are seeking factor-based investments, as well as international exposure away from the United States.

The fund considers the following factors in selecting its equity holdings: dividend yield (70% weight), payout ratio (15%), and dividend growth (15%).

As a fairly new fund, FIDI has just $15.95 million in assets under management and an average daily trading volume of $180,000. Over its brief existence, FIDI has slid 8%. However, over the same period of time, the market has fared worse, falling 9.4%. The fund’s expense ratio of 0.39% is on the lower end, compared to other exchange-traded funds that focus on dividend-paying holdings. FIDI’s dividend payout is about 4%, which may well attract investors.

Chart courtesy of Stockcharts.com

FIDI’s top five holdings are Royal Dutch Shell PLC (RDSB), 3.27%; Vodafone Group PLC (VOD), 3.23%; Telstra Corporation Ltd (TLS), 3.14%; SSE PLC (SSE), 3.01%; and BT Group PLC (BT.A), 2.80%.

For investors seeking a dividend-paying fund with an international focus, Fidelity International High Dividend ETF (FIDI) could be worth your time to consider, especially after its recent pullback. As always, make sure to do your due diligence before making any investment decisions.

I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.