New U.S. Tariffs Create Case for International Dividend ETFs
It’s becoming increasingly clear that tariff tensions between the United States and the rest of the world won’t be going away any time soon. Last Friday, the U.S. imposed a series of tariffs on 60 different trading partners, including China, Canada, and the European Union. The new tariffs ranged between 10% and 12.5%, covering a variety of goods.
Key Takeaways:
These brand-new tariffs serve as a reminder for advisors and investors that geopolitical tensions seem slated to persist for the coming months. As such, folks may want to consider how they go about building their exposure to international companies.
One way to tackle this problem is to foster exposure to international securities with a focus on dividends. Dividend income can provide a meaningful cushion to offset potential volatility down the line. Furthermore, companies that provide stable cash flow and dividends tend to weather volatility better than more speculative growth picks.
The Large- and Midcap Dividend Opportunity
There are plenty of ETF approaches that can help individuals amplify their exposure to international dividend companies. For instance, the Franklin International Dividend Booster Index ETF (XIDV) could offer a strong use case.
XIDV aims to provide potent dividend yield through the use of the VettaFi New Frontier International Dividend Select Index. This index examines large- and midcap international stocks, keeping both concentration risk and volatility in mind.
See More: Consider This Prudent Approach to International Stocks
Time to Tilt Towards International Small-Caps?
Those looking to tilt towards smaller international companies may find the WisdomTree International SmallCap Dividend Fund (DLS) appealing. DLS focuses on generating investment exposure to dividend-paying small-caps from developed markets outside Canada and the United States.
Due to their valuation opportunities, small-caps have been seeing growing interest from the broader investment community. Gaining exposure to these companies — especially from an international lens — could provide potent diversification.
Region-Specific Dividend Exposure
Some international dividend approaches focus on gaining exposure towards a specific global region. This includes the Matthews Asia Dividend Active ETF (ADVE).
True to its name, ADVE invests in dividend-paying securities from the Asia Pacific region. Bolstered by active management, the fund can invest across the cap spectrum, and tilts towards quality companies.
These three funds employ distinct approaches to help foster exposure to dividend-paying international stocks. This simply showcases how investors and advisors have plenty of tools at their disposal to navigate the latest tariff turbulence. Even if new tariffs shake up the market in the near-term, these dividend strategies can bolster a portfolio with yield, help folks meet their income goals, and still maintain that crucial international exposure.
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for XIDV, for which it receives an index licensing fee. However, XIDV is not issued, sponsored, endorsed, or sold by VettaFi. VettaFi and its affiliates have no obligation or liability in connection with the issuance, administration, marketing, or trading of XIDV.
