ETF: The GLODIV buys quality

Kristia van HeerdenETF Blog, Latest

coreshares global dividend ETFIt’s been three and a half years since the listing of the CoreShares Global Dividend ETF (GLODIV). While you might be forgiven for thinking this is a good bet for dividend income—it has the word “dividend” right on the sticker—we prefer to think of this ETF as a way to ensure you invest in high quality companies. Dividends are at the the core of this ETF’s methodology, but not in the way you might think. You’ll notice over the past two years this ETF hasn’t had an exceptional dividend yield, but the performance of the underlying stalwarts more than compensates for this.

The ETF methodology is based on the premise that high quality companies, the kinds of companies that have been around for generations, consistently pay a dividend. Since dividends are a share of a company’s profits, companies that aren’t turning a profit typically don’t pay dividends.

Instead of including companies that pay a huge dividend, the ETF includes companies that pay a consistently growing dividend. In more established markets like America, a company has to have paid and increased its dividend payments for 25 years before being included in the ETF. Since a company has to be more than 25 years old to be included, this is a fad-free ETF. You will recognise companies like Coca Cola, McDonalds and Johnson & Johnson. It’s also packed with companies you may never have heard of that have been effectively getting on with business since the 1800s. The strict dividend payment requirement therefore acts as a filter, excluding companies that are affected by market cycles. Companies with staying power provide services we need, no matter what the weather.

The GLODIV ETF is actually a combination of four dividend aristocrat indices representing different regions. Each index has to adhere to the same criteria, although the number of dividend-paying years differs by region. In addition to USA-listed companies, the ETF includes exposure to Europe, Canada and the Pan Asian market.

Since more mature companies are included in the ETF and since every company pays a dividend, you shouldn’t expect share price movements that will blow your hair back. However, you can expect a smoother ride during turbulent times. These companies have made it through market crises before and will likely continue to do so. Local investors can also benefit from the fact that the ETF is dollar denominated. Exchange rate movements can have a positive impact on the price of the ETF.*

The four sub-indices combined will give you exposure to 306 solid, reliable companies across countries like the United States, the United Kingdom, Japan, Canada, France and Switzerland. The ETF pays dividends twice a year, in June and December.

*Of course they can have a negative impact too.

ETF name CoreShares S&P Global Dividend Aristocrats
ETF issuer CoreShares
Issue date 22 February 2018
TER* 0.65%
ETF benchmark S&P Global Dividend Aristocrats Blend Index
Tax-free savings account Investment allowed
ETF major holdings View all the holdings here.
Market cap* R833m

1 year +20.2%

3 year +45.9%

Since inception +75.4%

Dividend yield 2.0%

*January 2020