Comparing Dividend Yields in Three Different Markets

Individual investors know that dividends are paid to common shareholders by corporations across the world, in different economies, different markets, and variety of industry segments. It is also a common knowledge that the characteristics of such dividends such as yield, frequency, how dividends are perceived, quality, and growth are very different. In addition, as a US-based investor, there are additional risk factors, some of which I had discussed earlier.

I am of the view that a look at individual index and their yield should provide general birds’ eye view of trends in any given market. While there may be varied arguments about quality and validity of such comparison, I still believe it is a good start to understand any given market and its policies vis-à-vis common shareholder dividends.

I compared three markets viz. US markets (using SPY), Europe (using IEV), India (S&P CNX NIFTY). I would have liked to compare Brazil and China, but could not identify a low cost ETF or fund that represented at least 60%+ of the local market.

  • SPY: It represents S&P500 equity index which approximately covers 75% of the large to mid cap market capitalization of US equities.
  • IEV: It represents S&P Europe 350 equity index which covers 17 major European markets and approximately 70% of the region’s market capitalization.
  • NIFTY: It represents S&P CNX NIFTY index which covers 22 different sectors in Indian economy and approximately 64%+ of the countries market capitalization.

I looked at dividends from year 2000 onwards because (1) Emerging markets like India started showing significant addition to global economy; and (2) since year 2000 US markets are considered to be facing challenges. I wanted to compare this period because differences get magnified during challenging economic times.

Chart for Dividend Yields

Chart 1: Dividend Yields

Chart 2: Dividends Growths

Chart 2: Dividends Growths

The Chart 1 shows the dividend yield for all three indexes (as represented by corresponding ETFs) and Chart 2 shows the dividend growth year-over-year.

  • In terms of percentage yield, the dividends seem to be consistently higher for European markets. It was around 2.5% yield and has increased to 3%+ in last couple of years. In terms growth of dividends, there is quite a bit of variation in year-over-year growth. The key observation here is, it has always been positive i.e. dividends have always grown relative to the preceding year.
  • The dividend yield for S&P is lower than European 350 index. It has been somewhat consistent around 1.8% to 1.9%. Similar to European 350 index, the S&P500 yield has also significant jump in yield due to equities going down. In terms of growth of dividends, the year-over-year growth seems to be very erratic, many times on negative sides.
  • The dividend yield of Indian market appears to have an upward trend. However, it has seen wild swings in terms of year-over-year growth. As any investor would have expected, the volatility in dividends is clearly seen on Chart 2 (although it is only for 6 years of data).

This does not include the focused dividend funds which may provide higher yield and a different growth trends. However, it does provide a birds eye view based on local indexes. The summary is, the US and European markets show consistency in dividends relative to Indian market. However, the growth trend is seems to be Indian markets. I would continue to look for a similar ETF or low cost funds with represent Brazil and China. If you know any such fund, please your comments below.

2 Responses to “Comparing Dividend Yields in Three Different Markets”

  1. Jean-David says:

    For Brazil you could consider EWZ.
    For China the ETF you could look at is FXI

    With Russia, if you wanna finish the loop for the BRIC, I believe the ETF that grasps the biggest portion of the total market cap is RSX.

    • Dividend Tree says:


      Thanks for your inputs. In any future post I will look into EWZ. However, I intentionally did not consider FXI. It is only for 25 companies in China. Russia investing is too alien to me.


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