International large-cap core funds offered an average dividend yield of 3.1% over the 12 months ended May 31, compared with 2.2% for U.S. domestic large-cap core funds. Value funds showed similar results.
Those numbers suggest advisors who are looking for dividend income for clients could benefit by widening their search to a global perspective, according to a report by Standard & Poor’s mutual fund analyst Dylan Cathers.
Cathers said 40% of the gain in international shares during 2010 came from dividend payments, according to Financial Planning magazine. An added benefit is the increased diversification that accompanies international investing.
Cathers suggests three specific international funds that have a record of providing above-average dividend yields: The Templeton Foreign Fund, Homestead Funds Inc.’s International Value Fund, and American Beacon International Equity Fund.