Explaining why ETFs suck isn't why I'm writing this post. Rather, the real reason is that I'm actually considering buying a couple. Yeah really!
Foreign stocks: a glaring hole in my portfolio. In a perfect world foreign stocks would pay dividends quarterly and not have dividends withheld just like my favorite dividend champions. Unfortunately such conditions are very rare. American stocks spoil us with a level of predictability and stability not seen anywhere else (with the exception of Canada). But there are tons of quality foreign companies such as Nestle, Novartis, and National Grid. The problem is I simply do not want to be paid only once or twice a year! I will not accept that. So I'm left looking at stocks from Canada and a few from the UK. I currently own TD and EIFZF plus monitor CM, EMRAF, UL, and BP. So I follow a grand total of six stocks outside the US.... There are a lot more quality companies around the globe than that!
For the price of an ongoing fee I can turn annual and semiannual dividends into a quarterly paying ETF. Now I spent a few hours looking at various foreign dividend funds and couldn't find a single one where the distribution stream was smooth and predictable. No matter what I do it's going to be bumpy. But I can gain exposure to a bunch of great companies I would otherwise not be interested in, avoid the withholding tax (the fund should deal with it), and get that quarterly dividend I require.
I have access to 30 no transaction fee iShare ETFs with my Fidelity brokerage account. I can buy small lots of $50 or $100 without worrying about commissions. Anyways one particular fund caught my attention:
iShares Dow Jones International Select Dividend Index Fund (IDV):
- Holdings: 101
- Dividend Yield (ttm): 5.19% (paid quarterly,YAY!)
- Expense Ratio: 0.50%
- P/E: 15.1 / P/B: 2.63 / Beta: 1.49
- Major Holdings: British American Tobacco, Eni, Commonwealth Bank of Australia, Royal Dutch Shell
- Other Holdings: National Grid, Seadrill, Bank of Montreal, Emera, Vodafone
- Countries: 21% Australia, 17% UK, 7% Hong Kong, 6% France, 6% Italy