These Global Dividend Stocks Offer Income and Diversification

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some global dividend stocks to your portfolio but don't have the time or expertise to hand-pick a few, the SPDR S&P Global Dividend ETF  (NYSEMKT: WDIV  ) could save you a lot of trouble. Instead of trying to figure out which global dividend stocks will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual-fund cousins. This ETF, focused on global dividend stocks, sports a relatively low expense ratio -- an annual fee -- of 0.4%. It recently yielded 2.2% and contains both U.S.-based and foreign-based companies.

This global dividend stocks ETF is too new to have much of a track record to assess, but it's full of dividend-paying large-cap stocks that offer income even during market downturns. 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.

Why global dividend stocks?
It's best to diversify your holdings not only by market size and industry but also geographically. If the U.S. economy stalls or slides, your losses could be partially offset by investments in other economies that may still be performing well. Global dividend stocks offer an extra bonus, as dividends can be quite powerful. Internationally reaped ones can be a little more complicated than domestic ones, though.

More than a handful of global dividend stocks had strong performances over the past year. U.K.-based telecom titan Vodafone (NASDAQ: VOD  ) soared 54% and offers a good way to profit from Europe's rebounding economy. It's setting its sights further, too, recently winning approval to buy all of its Indian subsidiary (it currently owns 64% of it), and positioning itself to benefit more from India's growth. Bears don't like Vodafone's shrinking free cash flow, but bulls like its hefty dividend and growth prospects, and some folks wonder whether AT&T will buy Vodafone. Vodafone's first half of fiscal 2014 offered revenue and operating income slightly above expectations.

New York Community Bancorp (NYSE: NYCB  ) popped 34%, is near a 52-week high, and yields about 6%. Known for solid management, it has grown by more than 20% annually since its IPO in 1993, far outpacing rivals as it has acquired other banks and grown its commercial and industrial lending business. The bank's third quarter featured estimate-topping earnings (albeit lower than those a year ago due to declines in mortgage-banking income) and improving credit quality. New York Community Bancorp has attracted many with its cost cutting and risk management, but some worry that its dividend might get reduced if the bank grows larger.

Oil refiner HollyFrontier (NYSE: HFC  ) , based in Texas, gained 23% and yields 2.4%. HollyFrontier has reduced refining capacity at its Navajo refinery due to waste water constraints, but that's a short-term problem. Bulls like the company's prospects from the Barnett Shale region. Its cash generation, solid balance sheet, and special dividends are also pluses. HollyFrontier has faced some challenges, such as oil price spreads, but it still notched a revenue gain in its third quarter.

Other global dividend stocks didn't do quite as well over the last year, but could see their fortunes change in the coming years. Canada-based utility company TransAlta (NYSE: TAC  ) shed 11%. It recently sported a dividend yield topping 8%, but its payout has been shrinking over the past few years. It's a significant wind-power generator, via its TransAlta Renewables subsidiary, and it's an investor in geothermal power production, too. In its last quarter, revenue grew 19%, but net income turned into a net loss.

The big picture
If you're interested in adding some global dividend stocks to your portfolio, consider doing so via an ETF. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in it and profiting from it that much easier.

Psst -- Bet you haven't heard of this company...
The Motley Fool's chief investment officer has just hand-picked a potential big winner for opportunistic investors, which he details in our new report: 
"The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2786294, ~/Articles/ArticleHandler.aspx, 8/29/2015 3:35:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Selena Maranjian

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

Today's Market

updated 6 hours ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 3:23 PM
WDIV $61.05 Up +0.16 +0.25%
SPDR S&P Global Di… CAPS Rating: No stars
HFC $46.84 Up +0.49 +1.06%
HollyFrontier Corp… CAPS Rating: ****
NYCB $17.64 Up +0.08 +0.46%
New York Community… CAPS Rating: ****
TAC $5.22 Up +0.06 +1.14%
TransAlta Corp (US… CAPS Rating: No stars
VOD $34.85 Up +0.03 +0.09%
Vodafone CAPS Rating: ****