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For Dividend ETFs, Watch Large Weightings

A crisis in the utility sector is unlikely but 20% of an entire portfolio in the industry would risk exposure to an unforeseen event.

Another fund relevant to the conversation is the PowerShares International Dividend Achiever Portfolio (PID). The fund currently has 30% in financials versus 41% when it was first listed four years ago. The reason for the smaller decline in the financial-stock weighting is that the fund has always been relatively heavy in the five large Canadian banks, which held up much better through the crisis, thanks to being more conservative. Thus, none had to cut its dividends.

The outperformance of the PowerShares International Dividend Achiever Portfolio also captures the general outperformance of foreign stocks over domestic in the past few years and the weakness in the U.S. dollar. If dividend-centric ETFs fit in to your financial plan, it makes sense to allocate a portion to a foreign dividend fund like PowerShares International Dividend Achiever Portfolio.

At the time of publication, Roger Nusbaum had no positions in the securities mentioned.

Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.

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