Unraveling Foreign Dividends
Bigger yields require patience.
A version of this article previously appeared in the June 2019 issue of Morningstar ETFInvestor.
Foreign stocks might look enticing to income-oriented investors. As of this writing, foreign-stock mutual funds and exchange-traded funds offer higher yields than U.S.-stock funds. But pocketing those dividends takes some effort. The portfolio managers of foreign-stock funds must navigate irregular payment schedules and a web of tax treaties to deliver those dividends to shareholders. Fortunately, well-equipped managers are up to the task. Investors need to exercise patience, as the frequency and magnitude of dividend payouts from foreign-stock funds tend to be less consistent than for U.S.-stock funds.
Daniel Sotiroff has a position in the following securities mentioned above: SCHB, VEA. Find out about Morningstar’s editorial policies.