Published Thu, 19 Mar 2020 01:16:12 -0400 on Seeking Alpha
I am bullish on VIGI, as I think the broad dividend theme could prove to be critical in a year of low yield and low growth.
I like the diversification that VIGI offers outside the US, and more so, the screening on "Y-o-Y dividend appreciation", which is a more demanding metric to fulfill than "dividend yield".
Uncertainty tends to benefit dividend-centric stocks.
Do you know the only thing that gives me pleasure? It is to see my dividends coming in. - John D. Rockefeller
While risk-off signals were tripped to get out of stocks January 27 in The Lead-Lag Report and have stayed that way throughout this extraordinary period, we now find ourselves in a difficult juncture for asset allocators. Given the elevated levels of uncertainty we find ourselves in, and the potential risks to growth, it looks very likely that interest rates will continue to remain depressed in the foreseeable future. As we move forward into Q2 '20 and beyond, I can see a quest for higher and consistent yield, bringing dividend plays into sharper focus. I also believe that this year could see some realignment in the capital allocation policies of global businesses as they struggle to find suitable growth avenues to deploy capital; this spare gunpowder should find its way into shareholders’ pockets by way of higher dividend payouts. All in all, I think the conditions are ripe for dividend themes to flourish. The recent weakness across all risk assets make this a fantastic time to get into these historically pricey dividend plays.
Having laid out this premise, I’d like to plump for the Vanguard International Dividend Appreciation ETF (VIGI). This is a full-replication, passively managed ETF that looks to track the performance of the Nasdaq International Dividend Achievers Select Index. The fund has a relatively recent history, having been around only for about four years (launch date 25th February, 2016), yet has managed to amass a sizeable total net assets figure worth... Read more