Investing in High Dividend ETFs

Funds that focus on dividend yield can be risky. Stocks with high dividend yields often achieve their status from price declines or declining fundamentals

Daniel Sotiroff 15 February, 2018 | 2:20PM

Investing internationally in dividend stocks can carry risks ETFs currencies equities

Funds that focus on dividend yield may look appealing to those seeking a consistent, stable source of income. Done well, they can deliver on this objective, but a shoddy process can expose investors to large amounts of risk, and lead to poor long-term outcomes. Comparing a good high-yield-oriented dividend fund to one with less-favourable characteristics should help illustrate some of the nuances that can make or break these strategies.

The Traits of High-Yielding Stocks

Funds that focus on dividend yield can harbour risk. Stocks with high dividend yields achieve their status from price declines, a consequence of poor prospects, declining fundamentals, or some combination of the two.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
SPDR® S&P International Dividend ETF32.58 USD-0.34
Vanguard Intl Hi Div Yld Idx ETF49.85 USD-0.42

About Author

Daniel Sotiroff  is an analyst, passive strategies research, for Morningstar

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