International stocks have long been out of favor and somewhat volatile, which has some investors skittish about venturing overseas. But a new actively managed fund focused on companies that are committed to raising their dividends may offer a more stable ride.
The Vanguard International Dividend Growth (VIDGX) launched in November. It’s run by the same Wellington Management team that’s behind Vanguard Dividend Growth (VDIGX), the longtime standout U.S. stock fund, and the two mutual funds share the same investment philosophy and approach. The new fund is designed, in fact, to be paired with the U.S.-focused Dividend Growth fund.
Homing in on dividend growth is a way to find superior businesses, says manager Peter Fisher, who as of the end of 2023 heads both Dividend Growth and International Dividend Growth. “Companies committed to paying and raising a dividend are disciplined about how they allocate capital,” he says. “They tend to be less risky and less cyclical businesses, and they have clean balance sheets.” The end result is a portfolio of high-quality companies that tends to do relatively well when markets are weak.
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Fisher is not a new hand at foreign stock investing or dividend growth stock investing. He has been working with Wellington’s dividend growth strategy team since 2012. And he has run a global dividend growth strategy since 2016, as well as an international dividend growth strategy since 2019, geared for both wealthy clients and institutional clients.
The fund, which charges a 0.54% expense ratio, is too new to talk about many specifics, including performance. But Fisher says the portfolio will hold about 40 stocks in well-known, multinational companies based in Europe, Japan, Hong Kong and Canada.
He expects the fund to yield roughly 3% and that companies in the portfolio will boast annual dividend increases of 10%, on average.
And there will be little turnover of names in the portfolio. “We’re buying to own for the life of the fund,” says Fisher. “We want to find businesses that we can be partners with and owners of for the long term.” We’ll be watching it carefully for now, until it has a longer track record.
Note: This item first appeared in Kiplinger’s Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
