Key Points
- Investors often feel they must sacrifice upside potential when focusing on dividend stocks.
- However, four ETFs with a focus on international names that pay strong dividends demonstrate that compelling returns are also possible.
- These funds take a similar view of high-dividend-yield companies from developed markets outside of the United States, but their specific strategies are important to distinguish for investors seeking international dividend exposure.
In the search for top dividend stock picks, investors often assume that they must trade potential capital appreciation for passive income from regular dividend payouts. This can be the case with some leading dividend companies. Their big growth days are long gone, and they currently enjoy stability, which allows for strong payouts but does not facilitate significant upside potential.
Indeed, when companies attempt to pay competitive dividends at the same time that they are growing, investors tend to worry that they will be stretched too thin and not able to accomplish both goals.
Fortunately, spreading the risk of a dividend growth play across a basket of stocks in an exchange-traded fund (ETF) can allow investors the potential to score a dividend win while also remaining open to the possibility of capital appreciation. The four funds below all achieved strong returns year-to-date (YTD) while offering a compelling dividend yield.
Narrow Focus on High-Quality European Dividend Stocks
The First Trust STOXX European Select Dividend Index Fund (NYSEARCA: FDD) is up about 36% YTD, making it one of the stronger non-leveraged ETFs in terms of performance in 2025. On top of that, it also offers a dividend yield of 5.79%.
FDD focuses on a pool of around 30 European equities with high dividend yields, selected from the broader STOXX Europe 600 Index. To be included in the portfolio, a company must have a positive five-year dividend-per-share growth rate and a dividend-to-earnings-per-share ratio of 60% or under.
Geographically, the fund is primarily concentrated in the United Kingdom, the Netherlands, France, and Germany, but smaller allocations are also received in many other countries. Financials make up nearly half of the portfolio.
FDD may be a good option for investors seeking exposure to European markets who are not particularly concerned about broad diversification. Though the portfolio is small, no single holding occupies more than about 6.3% of the total assets invested.
Wider Geographical Focus and Larger Portfolio
Another fund focused on the developed international space, the iShares International Select Dividend ETF (BATS: IDV) has returned more than 26% YTD and enjoys a dividend yield of 5.30%. It also has a slightly lower expense ratio than FDD above, at 0.49% compared to 0.59%.
IDV targets international stocks in developed markets with a consistent record of dividend payouts. The fund's portfolio of 100 stocks is not incredibly broad, but still provides a wider reach than FDD above for investors, particularly concerned about diversification.
Companies based in the United Kingdom and Italy make up more than 30% of the portfolio, although France, Spain, Hong Kong, and many other countries also receive decent allocations. IDV tends to focus on European names, although it also includes companies from Canada, Australia, parts of Asia, and elsewhere.
This ETF functions similarly to FDD above but takes a somewhat wider view, both in terms of geography and in portfolio size, making it a good option for investors aiming for a general international fund.
Strong Diversification With an International Dividend Stock Target
The WisdomTree DEFA Equity Income Fund (NYSEARCA: DTH) is similar in focus to IDV above. Its YTD return of 22.4% and its dividend yield of 4.30% are comparable to, if slightly lower than, both funds above. Its expense ratio is also comparable at 0.58%.
DTH seeks companies in developed markets outside of the United States and Canada. Its portfolio is much broader than IDV's and FDD's, with close to 600 holdings and no single holding representing more than about 4.4% of assets.
Companies from the United Kingdom, Japan, France, Spain, and Italy are most common, although firms based in 22 different nations make an appearance in the portfolio. Financial stocks represent about 28% of holdings, followed by industrials and utilities.
Mid-Cap Strategy Amid a Field of Ex-U.S. and Canada Developed Market Names
A fourth international dividend fund is the SPDR S&P International Dividend ETF (NYSEARCA: DWX). DWX has YTD returns of nearly 21% and a dividend yield of 3.68%, as well as the lowest expense ratio on this list at 0.45%.
At 103 names, DWX's portfolio is not as diversified as DTH's, although it also shares a focus on developed markets outside of the United States and Canada. Another way DWX distinguishes its portfolio from the funds above is in its focus on mid-cap names, but larger firms are also represented in this multi-cap fund.
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Companies Mentioned in This Article:| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| First Trust STOXX European Select Dividend Index Fund (FDD) | $15.40 | +0.8% | 5.78% | 9.79 | N/A | N/A |
| iShares International Select Dividend ETF (IDV) | $33.81 | +23.9% | 5.09% | 9.51 | N/A | N/A |
| WisdomTree International High Dividend Fund (DTH) | $46.33 | +0.7% | 4.30% | 11.63 | Moderate Buy | $46.33 |
| SPDR S&P International Dividend ETF (DWX) | $41.59 | -0.8% | 3.73% | 17.75 | N/A | N/A |
About Nathan Reiff
Experience
Nathan Reiff has been a contributing writer for DividendStocks.com since 2024.
- Professional Background: Nathan Reiff is a financial writer and analyst with more than a decade of experience investing and studying the markets through self-guided learning and educational resources from DividendStocks.com and beyond. He began his career in the SEO and cryptocurrency sectors before expanding into general finance and equity research as his interest in investing deepened.
- Credentials: He holds a Bachelor of Arts and Doctor of Musical Arts from Yale University and a Master of Music from the University of Michigan.
- Finance Experience: Nathan has been a contributing writer for DividendStocks.com since 2024. He is also a long-time contributor to Investopedia and Decrypt, where he has written extensively on topics including ETFs, cryptocurrencies, technology, real estate, alternative energy, and consumer staples.
- Writing Focus: He specializes in fundamental analysis, dividend stocks, ETFs, and emerging financial trends. His work bridges traditional markets with digital innovation, helping readers navigate everything from blockchain to blue-chip equities.
- Investment Approach: Nathan follows a long-term, fundamentals-first investing philosophy, emphasizing macroeconomic context, company performance, and sector dynamics.
- Inspiration: Nathan has learned a tremendous amount about the stock market from financial writers and educational resources and is eager to help inspire a new generation of investors through his writing.
- Fun Fact: He’s an avid cook and baker who brings the same creativity and precision to the kitchen that he does to financial analysis.
- Areas of Expertise: Fundamental analysis, ETFs, technology, retail, consumer staples, dividends, cryptocurrencies
Education
Doctor of Musical Arts, Yale University, New Haven, Connecticut; Bachelor of Arts, Yale University, New Haven, Connecticut; Master of Music, University of Michigan, Ann Arbor, Michigan