I often write about ETFs as they form the majority of my stock portfolio. ETFs offer a simple and passive way to invest money without the need to track individual stocks meticulously. In this article, I will review the iShares STOXX Global Select Dividend 100 UCITS ETF (Ticker: ISPA), examining its performance, holdings, and whether it fits into a dividend investment strategy.
Overview
The iShares STOXX Global Select Dividend 100 UCITS ETF aims to provide exposure to 100 high-yielding dividend stocks from around the globe. This ETF is suitable for investors looking for income through dividends. It has an expense ratio of 0.46%, which is slightly on the higher side for ETFs, but still within a reasonable range for international funds.
Top 10 Holdings
The top 10 holdings of the iShares STOXX Global Select Dividend 100 UCITS ETF represent a significant portion of the portfolio, offering a snapshot of its overall investment strategy:
SITC International Holdings - 4.68%
Yancoal Australia - 2.02%
New Hope Corp. Ltd. - 2.01%
HSBC Holdings Plc - 1.79%
Henderson Land Development Co. Ltd. - 1.71%
ABN AMRO Bank NVÂ - 1.68%
NatWest Group Plc - 1.67%
ING Groep NVÂ - 1.59%
Fortescue Ltd. - 1.56%
Xinyi Glass Holdings Ltd. - 1.52%
Geographical and Sector Allocation
The ETF’s geographical and sector diversification provides a balanced approach to risk management:
Countries:
United States: 17.97%
Hong Kong: 14.62%
Australia: 12.70%
United Kingdom: 8.02%
Sectors:
Financials: 34.72%
Energy: 11.82%
Utilities: 9.08%
Basic Materials: 8.68%
Dividend Growth and Performance
The current dividend yield stands at 5.6% which is quite high and this is due to the rapid increase of the payout which is to be seen if it is a one of or will be sustainable. From 2020 to 2024, the dividend payout has grown from €1.03 to €1.64, reflecting solid income growth. However, the capital appreciation over the last five years has been a modest 7.76%, indicating that while the ETF provides stable dividends, it hasn't seen substantial growth in share price.
Comparison with Fidelity Global Quality Income UCITS ETF (FGQI)
The Fidelity Global Quality Income UCITS ETF (FGQI) offers a contrasting investment opportunity. This ETF focuses on high-quality dividend-paying companies globally, with a significant weighting towards US stocks (70%), followed by Japan (7%) and the United Kingdom (3%). It has an expense ratio of 0.4%, slightly lower than the iShares ETF, and a current dividend yield of around 2.5%.
FGQI Top 10 Holdings:
Microsoft Corp. - 5%
Nvidia Corp. - 5%
Apple Inc. - 5%
Eli Lilly and Co -1%
Broadcom Inc - 1%
Verizon Communications Inc - 1%
ASML Holding NV- 1%
Visa Inc. - 1%
Novo Nordisk A/SÂ - 1%
Comcast Corp - 1%
FGQI Sector Allocation:
Technology - 25%
Financials - 16%
Health Care - 12%
Industrials - 12%
Consumer discretionary- 11%
Why I Prefer FGQI
I prefer the Fidelity Global Quality Income UCITS ETF (FGQI) for several reasons:
Geographical Diversification: FGQI has a broader international exposure with a significant focus on high-quality US companies, which historically have strong growth and dividend increase records.
Sector Balance: FGQI offers better sector diversification with a higher allocation to technology and healthcare, sectors I believe have strong growth potential and ISPA has an overallocation to the Finance sector.
Expense Ratio: FGQI has a slightly lower expense ratio (0.4% vs. 0.46%), which can make a significant difference in long-term returns.
Performance: While iShares has shown stable dividend growth, its overall capital appreciation has been modest. FGQI, with its focus on quality companies, has provided a more compelling growth and income potential.
Conclusion
The iShares STOXX Global Select Dividend 100 UCITS ETF is a solid choice for income-focused investors, offering stable dividends and decent geographical and sector diversification. However, its capital appreciation has been limited, and the expense ratio is slightly higher compared to other options like FGQI.
In my portfolio, I prefer to hold FGQI due to its balanced sector allocation, strong dividend growth, and overall performance. While both ETFs have their merits, FGQI aligns better with my investment goals, offering a mix of growth and dividend income that fits well within my long-term strategy.
I also have a separate article going more in-depth into FGQI.
Disclaimer: I am not a financial advisor, this blog is centered around my opinion and should not be viewed as legal, professional, or financial advice. For me, it's crucial to supplement my knowledge with resources like videos, articles, and books to deepen my understanding of investing principles and strategies.
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