FGD - DOL: A Dull International Dividend ETF

Summary

• DOL is a developed world dividend ETF excluding North America.
• Almost two-thirds of assets are invested in European companies.
• The top sector is financials.
• The fund has been quite resilient in the last 12 months.
• However, long-term performance of the strategy is unappealing relative to peers.

This dividend ETF article series aims at evaluating products regarding the relative past performance of their strategies and quality of their current portfolios. As holdings and their weights change over time, reviews may be updated when necessary.

DOL strategy and portfolio

The WisdomTree International LargeCap Dividend ETF ( DOL ) has been tracking the WisdomTree International LargeCap Dividend Index since 06/16/2006. It has 261 holdings, a 12-month distribution yield of 4.16% and a total expense ratio of 0.48%. Distributions are paid quarterly.

As described by WisdomTree , "t he Index is comprised of the 300 largest companies ranked by market capitalization from the WisdomTree International Equity Index. Companies are weighted in the Index based on annual cash dividends paid ". It includes developed countries except the U.S. and Canada. As it is weighted based on paid dividends (not yield), it favors mega-cap companies, which represent 58% of asset value.

The top country is Japan with 15.4%. European companies have an aggregate weight close to 65%. Hong Kong weighs below 4%, so direct exposure to China is low. The next chart plots the top 15 countries, representing 98% of the fund's assets.

Financials are the heaviest sector with 24.2% of asset value. Other sectors weigh no more than 11%.

The top 10 holdings, listed below, represent 22.8% of assets. The heaviest one is the Australian mining company BHP Group, whose weight is about 5%. Risks related to other individual companies are low.

Past performance compared to competitors

The next table and chart compare DOL performance since 2/1/2008 with five international dividend ETFs:

• The SPDR S&P International Dividend ETF ( DWX ), reviewed here
• The WisdomTree Global ex-U.S. Quality Dividend Growth Fund ( DNL ), reviewed here .
• The iShares International Select Dividend ETF ( IDV ), reviewed here .
• The First Trust Dow Jones Global Select Dividend ETF ( FGD ), reviewed here .
• The Invesco International Dividend Achievers ETF ( PID ), reviewed here .

DOL is the second worst performer in total return and risk-adjusted performance (Sharpe ratio). However, it has outperformed the same competitors in the last 12 months (see next chart). The Franklin International Core Dividend Tilt Index ETF ( DIVI ), which wasn't included in the previous chart because of a more recent inception date, beats DIVI by 10% in this complicated period. It has been reviewed here .

The share price has lost 6% since inception and it has been flattish since 2009. In the same time, the cumulative inflation in the U.S. has been over 37%. It implies a significant decay in inflation-adjusted value for long-term shareholders.

The annual sum of distributions was $1.54 per share in 2012 and $1.94 in 2022, meaning an annualized growth rate of 2.49% in 10 years. It is close to the average inflation rate for the same period (2.52%). Though, the next chart shows there is no steady uptrend in distributions.

Takeaway

DOL holds 261 stocks from developed countries outside North America, weighted by annual cash dividend. The heaviest country in the portfolio is Japan, but Europe represents almost two thirds of asset value. The top sector is financials, with 24% of assets. The yield looks quite attractive for income-seeking investors, but distribution growth is not steady and it has been just on par with inflation for 10 years. DOL is one of the worst performers among its peers since 2008, but it has shown some resilience in the last 12 months. Finally, the share price has been flattish since inception, which points to a large decay in inflation-adjusted capital. For transparency, a dividend-oriented part of my equity investments is in the actively managed Stability model (14 stocks), disclosed and updated in Quantitative Risk & Value.

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