A Hefty Dividend Boosts Australia ETF

So there was no pattern of high dividend payouts resulting in slow earnings growth. In fact, there is a growing body of academic research debunking the popular notion that high dividends equal slow earnings growth.

Hypothetical, After-Fee, After-Tax Yields
Index	Yield on 2007E DPS (A)	Less: Expenses (B)	Less taxes @15% (C)	Net effective yield (A-B) x (C)
iShares MSCI Australia (EWA)	4.10%	59bp	0.85	3.00%
S&P 500 SPDR (SPY)	1.9	10	0.85	1.5
iShares DJ Select Dividend (DVY)	3.6	40	0.85	2.7
Source: TheStreet.com Ratings

Regardless, we're interested in the future, and going forward it appears as if Australian firms still offer good growth at a reasonable price. The companies in iShares MSCI Australia are expected to deliver faster earnings growth than companies in either of the other two indices both this year and next. Despite this, the fund trades at a slightly lower P/E than the S&P 500.

Readers looking for dividends and international diversification -- both of which are generally good ideas -- should take a look at Australia. The Land of Dividends offers not only rich yields but also international diversification, not just for diversification's sake but with stand-alone investment merit, thanks to good earnings growth at a reasonable price.

EPS Growth 2006-07 Est.

Source: TheStreet.com Ratings

Price/Earnings Ratio 2006-07 EPS Est.

Source: TheStreet.com Ratings