Dividends4Life: Risks Lurks In Global Dividend Funds

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Risks Lurks In Global Dividend Funds

Posted by D4L | Sunday, August 12, 2012 | | 0 comments »

With investors looking everywhere short of the surface of Mars for yield, they’re increasingly putting money into funds that invest in dividend stocks, as well as global markets. So it should come as no surprise that they’re often combining the two. In today’s Wall Street Journal, reporter Steven Rosenbush explores the growth in mutual funds and ETFs that buy dividend-paying stocks overseas, noting that assets in such funds have almost doubled to $12.1 billion since the end of 2009.

Since U.S. stocks have outperformed those in other markets recently, many overseas stocks currently look comparatively cheap, with European dividend stocks trading at a price-to-earnings ratio of about 12 and an average dividend yield of about 4.7%—about double the yield of U.S. companies. But, of course, there are specific risks, namely three that Rosenbush points out: Taxes, Risky sectors and Price risk.

Source: Baron's

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