Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to load up your portfolio with some global payers of hefty dividends, the WisdomTree International LargeCap Dividend ETF (NYSE: DOL ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously. It sports a sizable dividend yield near 5%, as well.
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The WisdomTree ETF's expense ratio -- its annual fee -- is a relatively low 0.48%. The fund is fairly small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.
This ETF has performed adequately but unspectacularly so far, roughly keeping pace with the overall world markets. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a low turnover rate of 23%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several dividend payers that the ETF owns had strong performances over the past year. Electric and natural gas utility DTE Energy (NYSE: DTE ) , for example, gained 25%, and recently yielded 4.2%. The company's revenue and earnings have been growing at accelerating rates over the past few years, though its location in Detroit has put pressure on it, as auto companies have struggled. Carmakers seem to be rebounding, but the local economy remains dismal.
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Telecom giant Telefonica (NYSE: TEF ) shed 37%, leaving it with a recent dividend yield of 10.5%. Since it's based in Spain and serves Europe, many have fled the stock due to the Continent's economic crisis. These folks are forgetting that Telefonica also serves Latin America, which is less crisis-ridden and sports faster-growing economies. Be ready for some dividend cuts, but even a lower payout could still leave the yield at high levels. And the stock is now in attractive territory.
France Telecom (NYSE: FTE ) is in a similar situation, down about 29% and yielding 13.1% recently. In its favor, France's economy is not ailing like that of Greece or Spain. France Telecom, too, expects a dividend reduction, and needs to expand in regions other than Europe, which are fairly saturated at this point. It's doing so in sub-Saharan Africa, actually, where its majority-owned "Orange" division is enjoying subscriber growth rates above 20% for its mobile service.
Australia-based natural-resource giant BHP Billiton (NYSE: BHP ) , meanwhile, shed 27%. It recently yielded 3.5%, and racked up a score of 8 out of 10 characteristics of the perfect stock. It's extremely diversified, dealing in everything from oil and gas to uranium, bauxite, gold, diamonds, and titanium -- among other things. Bears worry about the company's debt load, but bulls like its increased focus on shale fields, which could pay off well in the future.
The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
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