Thursday, March 23, 2006

Powershares International Dividend: Buy now or be priced out for ever !!!

PID is the Powershares International Dividend Achievers ETF. It is based on Mergent's international dividend achievers index of companies that have raised dividends for at least five years running. In my opinion this ETF, or a similar international dividend ETF, is a central part of any long term investment strategy.

Dividends from foreign companies are great way to profit from the eventual weakening of the US Dollar. As the dollar weakens over time, the value of foreign currency dividends will increase. At the same time strong profitable companies that make up the international dividend achievers index are poised to profit from the ever widening US trade deficit and gradual diffusion of economic activity away from the US.

PID is mostly concentrated on financial companies with somewhat smaller holdings in financial, energy, and utilities companies. Most of the stocks from English speaking countries, such as Canada and England which are best poised to absorb business from the US in the future. The index has recently expanded to include 60 companies, and thus provides pretty good coverage of the EFA world, with a fairly strong tilt to value stocks.

One thing to be aware of is the funds 0.50% expense ratio, which is a bit high for an ETF, but not excessive compared to other ETF's targeting foreign assets. After expenses the fund yields around 2.9% based on the last dividend of $0.11 per share

2 Comments:

At May 14, 2006 1:54 PM, Anonymous Anonymous said...

Any comment on what kind of dividend growth to expect from PID?

 
At May 14, 2006 3:13 PM, Blogger Market Participant said...

I would expect typical dividend growth of around 3% or so per year, plus any effect of currency fluctuations

 

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