Looking Abroad for Dividend Income

Value has trounced growth globally this year. High dividend yield companies, which tend to have high overlap with value indexes, have also outperformed.

The first quintile of companies in the MSCI ACWI Index by dividend yield has outperformed the fifth quintile by over 1,600 basis points (bps) and outperformed non-payers by over 1,900 bps.

Year-to-Date MSCI ACWI Index

Many investors are familiar with investing in search of dividend income when allocating to U.S. equities. Some may be less familiar with the global dividend investment opportunity—particularly when it comes to emerging markets.

The below table summarizes some key data points for dividend payouts across the globe.

Of the $1.4 trillion in the global Dividend Stream, $216 billion, or 15%, comes from companies within emerging markets. That amount is just over 3.5% greater than the 11.5% weight that emerging markets have in the market cap-weighted MSCI ACWI IMI Index.

The U.S., on the other hand, comprises just 43% of the global Dividend Stream but accounts for 60% of market cap. In part that is because the U.S. has higher valuations, and much less of its market cap weight is in companies paying a dividend.