International Equities Step Into the Spotlight in 2025

The ALPS International Sector Dividend Dogs ETF (IDOG), which tracks the S-Network International Sector Dividend Dogs Index (IDOGX), is positioned to capitalize on a shift towards international markets driven by attractive valuations, supportive policies, and earnings momentum abroad. IDOG's equal-weighted approach and focus on high-yield sectors like energy, financials, and utilities, alongside a weakening U.S. dollar, has resulted in a 17.80% year-to-date return, outpacing the iShares MSCI EAFE ETF (EFA).

Analysis

The financial landscape appears poised for a shift in 2025, with international equities potentially gaining prominence over their U.S. counterparts due to a confluence of macroeconomic factors. The ALPS International Sector Dividend Dogs ETF (IDOG), which tracks the S-Network International Sector Dividend Dogs Index (IDOGX), is presented as a vehicle to capitalize on this trend. IDOG's strategy involves an equal-weighted allocation to high-yield companies, particularly within sectors like energy, financials, and utilities, offering a potential counterbalance to U.S.-centric and market-cap weighted portfolios. Supporting this outlook are growth-friendly fiscal and monetary policies emerging in Europe and other developed nations, a weakening U.S. dollar which historically bolsters foreign equity returns for U.S. investors, and strengthening earnings growth forecasts in international developed markets, notably in infrastructure, defense, and energy. IDOG has demonstrated strong performance, with a reported 17.80% year-to-date return, slightly outpacing the iShares MSCI EAFE ETF's (EFA) 17.46% YTD return, distinguishing itself through a specific focus on dividend yield which EFA lacks. The combination of relatively attractive valuations in international markets, supportive policy environments, and positive earnings momentum abroad suggests a strategic rationale for exploring international dividend strategies.

Key Decisions for Investors

• Investors seeking to diversify beyond U.S. equities and capture potential yield enhancement should evaluate international dividend-focused ETFs like IDOG, given the favorable macroeconomic backdrop for international markets projected for 2025.
• Key indicators to monitor include the U.S. dollar's trajectory and the sustainability of earnings growth momentum in international developed markets, as these are pivotal to the international investment thesis.
• Carefully assess IDOG's specific sector concentrations in areas such as energy, financials, and utilities, along with its equal-weighted methodology, to ensure alignment with individual portfolio risk tolerance and income generation objectives.