Dividend ETFs In The Land Down Under

Australia offers a plethora of investment opportunities, thanks in part to its thriving financial and natural resource-based economy. 

However, one of the most compelling reasons to invest in the Land Down Under may be for the dividend income. 

The most prominent ETF that tracks these Aussie companies is the iShares MSCI Australia ETF EWA.  This fund has nearly $2 billion invested in 71 publicly traded large and mid-cap stocks.   EWA is market-cap weighted, and has more than 51 percent of its total holdings allocated to the financial sector. 

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Because of this overweight nature towards banks and brokerage companies, EWA has one of the strongest income streams of any single-country focused ETF.  The current 30-day SEC yield is listed at 4.02 percent and dividends are paid semi-annually to shareholders.

So far this year, EWA has gained 9.20 percent and bested many broad-based international plays such as the iShares MSCI EAFE ETF EFA, which has only produced a modest 2.77 percent return. 

Many diversified international and Pacific Rim ETFs have been bogged down this year by the underperformance of Japan, when compared to stronger European and developed nations. Australia has been fortunate enough to buck that trend and continue on an upward trajectory. 

An Aussie ETF 

Another competitive option to consider, if you are looking for an Australian income stream, is the WisdomTree Australia Dividend ETF AUSE. 

This ETF is constructed using a fundamental index designed to select the highest yielding dividend companies in the country.  The end result is a more balanced sector and individual company weighting with a similar number of total holdings. 

AUSE currently has a yield of 3.76 percent and dividends are paid quarterly to shareholders.  The increased frequency of dividend payments for this ETF may make it a more attractive quality for investors that are seeking a pure income play. 

The total return of AUSE in 2014 is 7.65 percent, and this ETF charges an expense ratio of 0.58 percent.  

For income investors that are looking for developed international exposure, Australia may be a compelling investment theme to consider.