Published Fri, 23 Aug 2019 03:22:53 -0400 on Seeking Alpha
(Source - Pexels)
We live in a world where it is terribly difficult to find yield and stability. All U.S. treasuries pay a roughly 2% yield, which is just 20 basis points above the projected inflation rate. "High dividend" funds such as corporate bonds (LQD) or even equities such as utilities (XLU) or REITs (VNQ) pay 3% or less. Equity valuations in the United States are among the highest in the world, even when economic growth rates have been subpar at best.
Perhaps the problem is that most U.S. investors do not look for investments outside of the United States. Emerging markets have made for a poor investment over the past few years. Accordingly, valuations in those economies today are incredibly low. Even more, most of the central banks of those countries aren't pushing interest rates ever-lower in a failing attempt to raise inflation but raising interest rates to stop it. By and large, EMs have been successful in stopping inflation and many may soon see an improved currency situation.
This brings me to the iShares Emerging Markets Dividend ETF (DVYE). The fund invests in a diverse set of cheap, high-dividend stocks in EM economies and currently pays a dividend yield of 7%. You do have the U.S. dollar strength risk, but over time that risk may turn into a considerable reward due to the growing currency war. Let's dig in to see if DVYE is a value trap or a forgotten opportunity.
The iShares Emerging Market Dividend ETF
DVYE is slightly newer than many ETFs and... Read more
Older articles featuring Eem (EEM):The Era Of Investment Glut And Inverted Yield Curves Will Come To An End
TLT - Nowhere To Go But Lower (Long-Term Bond Yields Higher)
The Yield Curve Is Persistently Signaling That Danger Lies Ahead
Will Rates/Yields Peak Soon?
Market Volatility Bulletin: U3 Unemployment Hits 45-Year Low, Treasury Yields Triggers Higher Short-Term VIX Readings
The Fed, The Yield Curve And The Outlook For Emerging Markets
The Runaway Train: High Yield Bonds Stand Up To Their Junk Status
Is Flatter Yield Curve Predicting A Recession Beginning In The United States, Or In The Emerging Market Nations?
Emerging Market Risks Accelerate As Corporate Yield Curve Inverts
CRY (=Currencies, Rates, Yields) For ME (Markets-Emerging), Argentina