I got news from Martin over at Den of the Lion Investor that Deutsche DB-X will be making the STOXX® GLOBAL SELECT DIVIDEND 100 ETF available to SGX investors.
The DJ STOXX® Global Select Dividend 100 Index consists of 100 stocks covering the highest-yielding stocks in the Dow Jones STOXX® Global 1800 Index.
The Index universe is defined as all dividend-paying companies in the Dow Jones STOXX® Global 1800 Index that have a non-negative historical five-year dividend-per-share growth rate and a dividend to earnings per-share ratio of less than or equal to 60% or 80%, depending on the respective region.
For your info, the Global 1800 consist of the biggest stocks in the world (600 in US, 600 in Europe, 600 in Asia). While we are still missing out some of the emerging markets, this ETF for once gives the Singapore investor a dividend exposure to some of the best dividend paying companies in the world.
Lower Payouts and Increasing Dividends the key here
Selection of the components of this ETF is key here. Research have shown that companies that were able to increase their dividend payouts and have low payout ratios tend to outperform in the long run.
Why is that? If all else being equal, a company can only increase its payout from 5 years ago if they are generating good cashflow. Of course there are exceptions to this as they can finance that by taking on debts but in general good cashflow translates to higher profits and higher dividends and higher share price appreciation.
A lower dividend payout ratio means that money is retain for investments and growth. This is much better than your REITs or Utilities that pay out near 100% and whenever they need more money they ask money from you investors again.
The Expense Ratio is listed at 0.50%. This is considered high if you compare to the US ETFs, but compare to Singapore unit trusts, this is rather low.
The launch date for Singapore ETF is listed as sometime last month but for the fund itself (its listed on a few european exchanges) it is listed in 2007, so its a rather young fund
How are the yields like?
The FactSheet that they release below states that the current distribution yield is 3.91%. But i think that is a figure in Dec 2009. If we factor in a 10% rise in the price, the current dividend yield should be around 3.5%.
I think it is still much better than the STI ETF and are more diversified compare to the STI ETF.
Here is a good article in Seeking Alpha that gives a good breakdown on the 28 US dividend Stocks from the Global Select Dividend 100 Index dated 10 december 2009 [link here>>]:
How much is the upfront sales charge?
There is no upfront sales charge like the 2% you pay to fundsupermart or dollerdex but you have to pay brokerage commissions to purchase the ETF listed on SGX. Typically they amount from USD14 upwards. So the advice is that don’t invest a small amount. I can see an investor accumulating SGD 3000 and the cost to buy is 0.70%.
This is much better then unit trust with a minimum of at least 1% sales charge (although you buy sell fast 3k you pay 0.70% + 0.70%, which will be higher)
I think this is a good etf and delightfully surprised by its inclusion in SGX. Let me know what you guys think about this. Is it worth investing in it?
Factsheet below >>