Dow Jones Global Select Dividend Index Fund

Investors who look for incomes from diversified international equities have one more option to choose from.

Early last week, First Trust launched a new global dividend ETF, the Dow Jones Global Select Dividend Index Fund, joining other international dividend-paying ETFs. The fund started trading on November 27th under ticker symbol FGD. The underlying index of FGD is the Dow Jones Global Select Dividend Index (PDF) which is defined by component companies of the 24 developed-market country indexes in the Dow Jones Global Indexes (DJGI) family.

The index applies strict dividend standard on what companies can be considered to join the index. Particularly, to be eligible for inclusion, according to the index’s screening procedure, a company must

  • Pay a current dividend.
  • Have a current-year dividend-per-share ratio that is greater than or equal to its five-year average annual dividend-per-share ratio.
  • Have a five-year average payout ratio of less than or equal to 60% for U.S. and European companies; or less than or equal to 80% for all other countries.
  • Have a minimum three-month daily average trading volume of $3 million.

Currently, FGD holds top 100 dividend-paying stocks, all members of the Dow Jones Global Select Dividend Index (DJGSDT). Companies in the index are weighted by their annual dividend yields, with an upper limit of 10% to prevent the index from being dominated by a single high-yield stock. The fund’s country breakdown is as following:

  • Australia: 28.41%
  • Great Britain: 22.14%
  • United States: 20.08%
  • Canada: 8.01%
  • Singapore: 5.27%
  • Hong Kong: 4.03%
  • Italy: 3.39%
  • Netherlands: 2.11%
  • New Zealand: 1.89%
  • Finland: 1.37%
  • France: 1.18%
  • Other: 2.12%

FGD has an expense ratio of 0.60% and dividend yield 4.95%, which is quite high compared to other dividend ETFs. Dividends are distributed on a quarterly basis and the index is rebalanced once a year in December.

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5 Responses to “Dow Jones Global Select Dividend Index Fund”

  1. Super Saver |  Nov 29, 2007 at 8:40 pm

    Sun,

    Thanks for the post. This ETF is another good defensive idea, since the dividend should help minimize the losses during a market decline.

  2. Tommy |  Dec 03, 2007 at 8:09 pm

    Very interesting. I’ve been looking at something like this to invest some funds in. I agree with Super Saver that the dividends are rather nice and the exposure to overseas sans China is nice (I already have other ETFs and funds that more than cover my China exposure).

    Thanks for the tip!