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With S&P at Record High, Consider Dividend ETFs with International Exposure

Stocks in this article: SDIV LVL DWX

Next, we look at the Guggenheim S&P Global Dividend Opportunities Index ETF (LVL), which tracks the S&P Global Dividend Opportunities NR Index. With this ETF, investors gain exposure to 103 large-cap stocks and ADRs that are accompanied by high dividend yields. One-fifth of the fund is devoted to U.S. assets, with most of the remainder offering exposure to securities in Australia and the eurozone.

From a sector basis, focus in placed on telecoms (which account for nearly 25% of the fund), energy stocks and financials. Annual fees are seen at 60 basis points, and yield for the ETF comes in at a strong 6.5%.

Last, we look at the SPDR S&P International Dividend ETF (DWX), which tracks the performance of the S&P International Dividend Opportunities Index. Dividend yields for the fund are also seen at 6.5%. But one of the more attractive features here can be seen in its expense ratio, which relatively low at 45 basis points. The fund is composed of 125 international stocks with high yields, but diversification is more limited as its top 10 holdings make up nearly a third of the total fund.

Dividends ETFs are generally focused on telecoms, utilities and financials. The SPDR S&P International Dividend ETF doesn't look to break this mold, as more than half of its holdings are devoted to these areas. The fund shows a nearly 75% correlation with developed markets (encouraging, given the performances we have seen so far this year), and a 15% correlation with what is seen in emerging markets.

So, while international ETFs with a focus on dividends have met selling pressure this year, it is important to remember that strong alternatives are available. Given the recent policy surprises from the Federal Reserve, these three ETFs are likely to perform well as we move into next year.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Cox is based in China, and has lectured at several universities there on international trade and finance, focusing primarily on macroeconomics and price behavior in equity markets. His articles appear on a variety of Web sites, including, Seeking Alpha, FX Street and others. Investing strategies are based on technical and fundamental analysis of all the major asset classes (stock indices, currencies, and commodities). Trade ideas are generally based on time horizons of one to six months.
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