iShares Dow Jones Intl Select Div Idx (IDV) – NYSEArca

The iShares Dow Jones Intl Select Div Idx ETF (IDV), listed on the NYSE Arca, is part of my investment strategy Ex-US International ETFs and Dividend Stocks. It seeks to achieve a solid and progressive dividend yield, while protecting itself against currency and market risk. The ETF seeks to replicate the Dow Jones EPAC Select Dividend Index by investing at least 90% of its assets in securities and depositary receipts of the underlying index. The latter is composed of securities that have a history of providing relatively high dividend yields.

The ETF allows you to complete your portfolio with top-quality companies that pay dividends in Europe, Asia, Australia and Canada, thereby providing good sectoral, geographic and monetary diversification.

Launched in December 2005, the Dow Jones EPAC Select Dividend Index measures the performance of the 100 highest dividend-paying non-U.S. companies in developed markets, based on the selection criteria described below. Markets represented include Canada, Western Europe, Japan, Australia, Singapore and Hong Kong.

To be included in the index: 

• companies must have paid dividends in each of the previous three years
• the dividend per share for the previous year must be greater than or equal to the three-year average
• the stock coverage ratio (inverse of the distribution ratio) on a 5-year average must be greater than or equal to 2/3 of the 5-year average coverage ratio of the Dow Jones Global Index of the country to which it belongs, or greater than 118%
• Earnings per share must be positive over the last twelve months
• The stock must have an average daily trading volume over the past three months of at least $3 million.

Top 10 Titles
Neopost (E:NEO) 4.74% Cmnwlth Bk Of Aust (E:CBA) 4.10% Brit Amer Tobacco (E:BATS) 3.13% Eni (E:ENI) 2.94% Royal Dutch Shell (E:RDSA) 2.61% Ncc (NCC-B) 2.52% Natl Australia Bk (E:NAB) 2.49% Hennes & Mauritz (HM-B) 2.14% Total (E:FP) 2.11% Provident Finland (E:PFG) 2.07%

Sectoral distribution

Geographic distribution

 

IDV offers an attractive average yield of 5.33%. In addition, the dividend is growing at a correct average annual rate of 9.51%. Volatility in CHF, thanks to sectoral, geographical and monetary diversification, only amounts to 15.17%, which is appreciable. The costs related to the management of the ETF are minimal, at 0.5%.

IDV is a perfect stock to diversify a heavily dollar-oriented portfolio, which is often the case when following a dividend growth strategy. Thanks to the absence of US stocks, as well as broad international diversification, the ETF displays a $risk zero. This means that a variation in the greenback has no impact on the CHF value of the security.

IDV undoubtedly has some nice features for a dividend-growing payer. In addition to the attractive income it provides, it provides a hedge against currency risk. With a rating *** It is ultimately a title that offers a good profitability/risk ratio. It is a title that could become interesting in the event of a drop in the price, for example. So keep an eye on it in 2014...

Sources: Yahoo Finance, Swissquote, S&P Dow Jones Indices, money.usnews.com