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EMGF: Finding Dividend Growth In Unexpected Places

Published Thu, 15 Oct 2020 11:15:45 -0400 on Seeking Alpha

Seeking AlphaETF AnalysisEMGF: Finding Dividend Growth In Unexpected PlacesOct. 15, 2020 11:15 AM ET|| About: iShares Edge MSCI Multifactor Emerging Markets ETF (EMGF), Includes: BABA, BABAF, VWOby: Cashflow CapitalistCashflow Capitalist High Yield LandlordBecome a “Passive Landlord” with our 8% Yielding Real Estate Portfolio.SummaryEMGF is a smart-beta emerging markets ETF that picks stocks based on four style factors: value, quality, momentum, and relatively low size.
Looking at its dividend payout year-over-year, I noticed that the EM ETF exhibits impressive, double-digit dividend growth.
The ETF's stock-picking methodology and underlying holdings are strong, giving me confidence that solid dividend growth will continue.
A more attractive entry point is likely to present itself in the coming months or years, though.

Investment Thesis
The iShares MSCI Emerging Markets Multifactor ETF (EMGF) tracks a "smart-beta" index of large- and mid-cap stocks in emerging or developing countries around the world such as China, India, South Africa, South Korea, and Russia. (Of course, it strikes me as a bit odd that South Korea and Russia would be counted among "emerging market" countries, but we'll get to that below.) Crucially, the ETF's stock-picking methodology relies on several style factors, which, when combined, are expected to achieve sustained outperformance over more plain, "vanilla" emerging market ETFs.
At a fund P/E ratio of 13x and price-to-book ratio of 1.5x, EMGF isn't terribly expensive, especially compared to a broad-based ETF of large-cap American stocks. Compare this to the Vanguard FTSE Emerging Markets ETF (VWO) with a P/E ratio of 16.3x and price/book of 1.9x.
The ETF also has a fairly low beta of 0.87, meaning that it is less volatile than the S&P 500 (SPY). The expense ratio is modest at 0.45%, and the dividend yield (based on the previous two semi-annual dividends) is 2.55%.
But the biggest surprise of all,... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
VANGUARD EMERGING MARKETS ETF 41.97   0.0 0.00 1.09 2.64

VANGUARD EMERGING MARKETS ETF - VWO
VANGUARD EMERGING MARKETS ETF - VWO  


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