Using Dividend ETF’s For Foreign Stocks?

avatar By: IS
Date posted: 11.07.2012 (4:00 am) | Write a Comment  (5 Comments)

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I’ve discussed the need and importance for any investor to hold international stocks in any investment portfolio. That is something that I’ve been focused on in the Ultimate Sustainable Dividend Portfolio. Earlier this year, I added Aflac (AFL), a top dividend stock that is based in the US but has a significant part of its business abroad. There are obviously many other possibilities as well as ADR’s.

Still Many Missing Pieces

The problem though is that for various reasons, many of the largest companies in the world do not have listed stocks on US markets. That means companies such as Nestle are available either through pink sheets (which I’m not a fan of buying) or in other cases the only way is to simply trade on foreign markets in Europe, Asia and elsewhere. That is certainly something that’s possible and brokers such as Interactive Brokers make it possible. However, it’s usually a very complex and expensive solution because you must deal with all of the complications of trading foreign stocks.

One Alternative

Trading and holding ETF’s has been something I’ve believed in for a long time and I think there are many different benefits. One clear benefit for dividend portfolios is gaining exposure to foreign markets. For example, an easy to manage and fairly cheap way to buy dividend stocks in emerging markets, Asia and some European countries is to simply buy ETF’s that track such indexes. Why? They’ll take care of all of the foreign currency transactions, taxes, paperwork, etc. It’s a no-brainer really and I think any strong dividend portfolio should include one of them. Here are a few of the options:

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You can certainly expect me to start adding a position in at least 1 or 2 of these in the USDP in the near future. I’d love to hear your thoughts on this. Do you hold a dividend portfolio? If so, do you hold international stocks? Did you buy them on US markets? Abroad? Through ETF’s?

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5 Comments

  1. Comment by Ian King — November 7, 2012 @ 8:08 am
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    I use XIN (ishares) as my foreign exposure. It has a decent dividend and is hedged to the C$.

  2. Comment by Bernie — November 7, 2012 @ 10:01 am
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    I too am lean in my foreign content (by foreign, I mean ex-Canada & ex-U.S.) Ideally, I would like a global consumer products ETF which does not hold any tobacco stocks. I’ve yet to find one. Would you know of any? For that matter, are there any broad based global ETF’s ex-tobacco?

  3. Comment by IS — November 7, 2012 @ 8:30 pm
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    @Ian – Nice, yes the yield is actually not bad, 2.67% for a very diversified basket of stock

    @Bernie – That is a tough one, I’ll take a look but it’s not easy to check regarding tobacco.. kind of a socially reponsible, international dividend ETF?:)

  4. Comment by Bernie — November 7, 2012 @ 11:29 pm
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    I really have no problem with other sin stocks, just tobacco. I’m really quite surprised there isn’t a consumer products ex-tobacco index in the first place.

  5. Comment by IS — November 8, 2012 @ 9:10 pm
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    @Bernie, might be obvious but why tobacco more than others?

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