This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dividend Dog Investing Goes Global

NEW YORK ( TheStreet) -- One long-standing investment strategy is called the Dogs of the Dow.

At the start of the year, you build a portfolio with the 10 highest-yielding stocks in the Dow Jones Industrial Average and then reconstitute the portfolio a year later.

This is a contrarian strategy because stocks with relatively high yields have those high yields because they have underperformed. Last year's laggards, the thinking goes, will be this year's leaders.

A year ago ETF provider ALPS launched the ALPS Sector Dividend Dogs ETF (SDOG), which owns the five highest-yielding stocks from each of the 10 S&P 500 sectors. Each stock in the fund is targeted at a 2% weight, and each sector is targeted at a 10% weight. Since inception SDOG, has outperformed the S&P 500 by three percentage points with a higher yield.
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/11968997/1/recreation-stocks-for-the-fourth-of-july.html"><em>Recreation Stocks for the Fourth of July</em></a>]

Looking to repeat that success of a foreign scale, ALPS last week launched the ALPS International Sector Dividend Dogs ETF (IDOG). IDOG will target developed countries excluding the U.S. and Canada. Similar to SDOG, IDOG owns the five highest-yielding stocks from each of the 10 sectors, with each stock targeting a 2% weight in the fund and each sector having a 10% weight.

IDOG will pay a quarterly dividend, but it too early for any specific yield information. It is worth noting that foreign companies often only pay a dividend once or twice a year so IDOG's payouts could be uneven.

The country breakdown is very similar to the iShares MSCI EAFE ETF (EFA). Japan is the largest country at 18%, followed by the U.K. at 12% and Finland and Australia, each with a bit less than 10%.

The country weightings are similar to EFA, which may not be a good thing. The Japanese market was white-hot earlier this year before falling 20% in the last few weeks.
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/11969100/1/small-cap-dividend-growers-still-packing-a-punch.html"><em>Small Cap Dividend Growers Still Packing a Punch</em></a>]

The European markets, which make up a bit more than 50% of the fund, have generally not been doing well for a long time. To the extent that the weak performance has been because of poor fundamentals, it may still be a while before the fundamentals in these countries start to improve.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
EFA $63.98 0.00%
IDOG $26.12 0.00%
SDOG $36.84 0.00%
AAPL $126.44 0.00%
FB $87.28 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs