IDOG: 50 Dogs From Over The World

This article series aims at evaluating ETFs (exchange-traded funds) regarding past performance and portfolio metrics. Reviews with updated data are posted when necessary.

IDOG strategy and portfolio

ALPS International Sector Dividend Dogs ETF (NYSEARCA:IDOG) was listed on 06/27/2013 and tracks the S-Network International Sector Dividend Dogs Index. It has 50 holdings, a trailing 12-month yield of 5.12% and a total expense ratio of 0.50%. Distributions are paid quarterly. IDOG is an ex-US global variant of ALPS Sector Dividend Dogs ETF (SDOG), reviewed here.

As described by ALPS, the fund

(…) applies the ‘Dogs of the Dow Theory’ on a sector-by-sector basis using the S-Network Developed International Equity 1000 Index as its starting universe of eligible securities. IDOG provides high dividend exposure across 10 sectors of the market by selecting the five highest yielding securities in each sector and equally weighting them.

The GICS classification has 11 sectors, but real estate is excluded from the universe.

IDOG is quite diversified geographically: no country weighs more than 18%. The top two countries are Japan (17.8% of asset value) and France (15.9%). Other countries are below 10%.

Constituents, and therefore sectors (except real estate) are reset in equal weight on every rebalancing day. However, they may drift with price action. The current top 10 holdings, listed below, represent 21.9% of asset value. These are the components with the highest price return since the last rebalancing. All weights are between 1.6% and 2.4%, so risks related to individual companies are low.

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Performance

The next chart compares 10-year total returns of IDOG and four other non-currency hedged global dividend ETFs:

• iShares International Select Dividend ETF (IDV), reviewed here,
• SPDR S&P Global Dividend ETF (WDIV), reviewed here
• First Trust Dow Jones Global Select Dividend ETF (FGD), reviewed here
• SPDR S&P International Dividend ETF (DWX), reviewed here.

IDOG is the best performer, but the difference with its two closest competitors is just about 1% in annualized return.

The difference is more impressive in the last 12 months: IDOG has outperformed by 13%.

The annual sum of distributions has slightly decreased between 2014 and 2022, from $1.19 to $1.13 per share (-5%). In the same time, the cumulative inflation has been about 26%, based on CPI. IDOG dividend has been unable to keep pace with U.S. inflation. This is partly due to the surge of the dollar index: over +30% between 2014 and 2022. IDOG portfolio’s assets and distributions are in other currencies, and as a whole they have suffered from exchange rates variations.

As a reference in the U.S. market, Schwab U.S. Dividend Equity ETF (SCHD) shows a total dividend growth of 144% during the same period.

Scanning IDOG portfolio

IDOG is significantly cheaper than WDIV and DWX regarding the usual ratios (see next table). Moreover, it is the best of the group in aggregate earnings growth (trailing 12 months).

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Data: Fidelity

Takeaway

ALPS International Sector Dividend Dogs ETF picks the five stocks with the highest yields in each sector, except real estate, in an ex-U.S. developed market universe. The fund implements an equal-weight methodology. It is well-diversified across holdings, sectors and countries. Distributions could not keep pace with inflation, partly due to currency risks. IDOG looks good among competitors regarding past performance, valuation and growth metrics. In fact, relative to peers, IDOG is more attractive than its sibling SDOG. Nonetheless, I beware of any dividend ETF whose strategy is mostly based on yield without quality screening.