Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add dividend payers to your portfolio and would like some international diversification, as well, the PowerShares International Dividend Achievers ETF (NYSE: PID) 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 a lot of them simultaneously.
The ETF's holdings are based on the "dividend achievers" concept, which seeks companies that have increased their dividends each year over the past five years. It yields about 3.5%.
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is a relatively low 0.50%.
This ETF has performed well, handily outperforming the world market over the past three and five years. 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.
What's in it?
Several global dividend payers did well over the past year. U.K.-based telecom giant Vodafone (Nasdaq: VOD), which was recently yielding 7.2%, gained 10%. That's impressive, given its ties to beleaguered Europe. Helping matters is its involvement elsewhere, such as in emerging markets, as well as its innovative ventures, such as a deal with Visa to develop a mobile payment system. Bears worry about slowing growth in emerging markets, though, as well as losses of customers and revenue.
Gas and oil shipper Teekay LNG Partners (NYSE: TGP), headquartered in Bermuda and recently yielding 7.1%, also gained 10% over the past year. The company has been increasing its number of ships, and benefited from robust day rates during the year. Natural gas prices have been quite low lately, but demand for liquefied natural gas is expected to rise in coming years.
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Telefonica (NYSE: TEF), based in crisis-ridden Spain and recently yielding a whopping 12.8%, shrank by 50%. That dividend just got suspended, though, as did stock buybacks. Spain is indeed in trouble, but many investors are overlooking the fact that Telefonica derives much income from operations in healthier and faster-growing Latin America. The company has pledged to reinstate its dividend next year, but some think that may not be possible.
Finally, mining and fertilizer company Vale (NYSE: VALE), based in Brazil and recently yielding 6.5%, sank 44%. It sports eight out of 10 traits of a perfect stock, but has been whacked by Europe's big slowdown and slowing growth in China, as well, where it does a lot of business. The company recently posted disappointing earnings, but its management is expecting iron ore prices to recover.
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.
If you're craving even more dividend ideas, I invite you to download a copy of our special report, "Secure Your Future With 9 Rock-Solid Dividend Stocks," which is loaded with income-producing companies hand-selected by our top analysts. Best of all, this report is free, so don't miss out!
