Opinions
Larry Berman CFA, CMT, CTA
BMO International Dividend
ZDI-T
DON'T BUY
Feb 24, 2020
$21.050
Stock price when the opinion was issued
E.T.F.'s
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COMMENT
International dividend payers are a lot higher than those in North America. The S&P yields below 2%; European payouts are over 3%. Given foreign withholdings, Canada is still the best place to invest for dividend payers in taxable accounts. It depends on your goal. He prefers ZWP or ZWE, which offers a covered call overlay to enhance yields in Europe (he's a defensive investor).
E.T.F.'s
BUY
All the dividend payers outside of North America. Global dividend payers have a higher yield than domestic dividend players, but you do not get the benefit of the dividend tax credit. Internationally, you have more value stocks than growth stocks. It makes a lot of sense if you think growth is expensive and value will outperform.
E.T.F.'s
COMMENT
ZDI vs. VIDY -- international dividend ETF for non-registered account?
ZDI uses the MSCI World Universe International Developed Markets index, which does not include exposure to South Korea. VIDY uses the FTSE series, which does include South Korea. That's the main difference, along with a slight difference in MER (ZDI slightly more expensive).
Focus on the exposure, not the MER. You have to make a call whether there are enough good dividend-paying stocks in South Korea to want to choose VIDY. Remember, these dividends don't get preferential tax treatment, it's all income. So if you're looking for income in your taxable portfolio, you get a much better tax experience with capital gains from the covered call overlay.
E.T.F.'s
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ZDH-T is the hedged version. He is okay with exposure to the unhedged version. He would rather get the international version with covered call overlay. ZHE-T/ZWP-T.