Balancing Income and Growth: Four International Dividend ETFs to Watch in 2025
Investors seeking regular income often face a difficult trade-off: prioritizing dividend payouts can mean sacrificing potential capital appreciation. While some established dividend companies offer stability, their high-growth phases may be over, limiting significant upside. However, a strategic approach using exchange-traded funds (ETFs) can offer both a compelling yield and the opportunity for growth. Several funds have demonstrated strong year-to-date (YTD) returns while maintaining attractive dividend yields, presenting a promising option for investors.
The Allure of Dividend ETFs
The concern that companies stretching themselves too thin by simultaneously pursuing dividends and growth is a valid one. “Investors often worry that attempting to do both will lead to unsustainable financial strain,” one analyst noted. Fortunately, diversifying across a basket of stocks through an ETF mitigates this risk, allowing investors to potentially “score a dividend win while also remaining open to the possibility of capital appreciation.” Below, we examine four international dividend ETFs that have delivered impressive results so far in 2025.
First Trust STOXX® European Select Dividend Index Fund (FDD): A Focused European Play
The First Trust STOXX® European Select Dividend Index Fund (NYSE:FDD) has surged approximately 36% YTD, positioning it as a top performer among non-leveraged ETFs. Adding to its appeal, FDD offers a dividend yield of 5.79%.
FDD concentrates on roughly 30 European equities boasting high dividend yields, selected from the broader STOXX Europe 600 Index. Inclusion criteria require a positive five-year dividend-per-share growth rate and a dividend-to-earnings-per-share ratio of 60% or under. Geographically, the fund leans heavily towards the United Kingdom, the Netherlands, France, and Germany, with smaller allocations in other European nations. Nearly half of the portfolio is allocated to the financials sector.
According to a company release, FDD is well-suited for investors specifically targeting European markets and comfortable with a less diversified portfolio. Despite its concentrated holdings, no single stock comprises more than 6.3% of the fund’s total assets.
iShares International Select Dividend ETF (IDV): Wider Reach, Lower Costs
The iShares International Select Dividend ETF (NYSE:IDV) provides a broader international scope, returning over 26% YTD with a dividend yield of 5.30%. It also boasts a slightly lower expense ratio of 0.49%, compared to FDD’s 0.59%.
IDV targets international stocks in developed markets with a proven history of consistent dividend payouts. Its portfolio of 100 stocks offers greater diversification than FDD. The fund’s geographic focus remains largely European, with significant holdings in the United Kingdom and Italy, but also includes allocations to Canada, Australia, parts of Asia, and other regions.
“IDV functions similarly to FDD but takes a somewhat wider view, both in terms of geography and portfolio size,” a senior official stated. This makes it a suitable option for investors seeking a more general international fund.
WisdomTree International High Dividend Fund (DTH): Strong Diversification
The WisdomTree International High Dividend Fund (NYSE:DTH) shares a similar focus with IDV. Its YTD return of 22.4% and dividend yield of 4.30% are comparable, though slightly lower. The expense ratio is also comparable at 0.58%.
DTH invests in companies within developed markets outside of the United States and Canada. Its portfolio is significantly more diversified than both IDV and FDD, holding close to 600 stocks with no single holding exceeding 4.4% of assets. The fund’s holdings are concentrated in the United Kingdom, Japan, France, Spain, and Italy, representing firms from 22 different countries. Financial stocks account for approximately 28% of the portfolio, followed by industrials and utilities.
SPDR S&P International Dividend ETF (DWX): A Mid-Cap Strategy
The SPDR S&P International Dividend (NYSE:DWX) ETF rounds out this selection with YTD returns of nearly 21% and a dividend yield of 3.68%. It also has the lowest expense ratio on this list, at 0.45%.
DWX’s portfolio of 103 names, while not as diversified as DTH’s, still focuses on developed markets outside the U.S. and Canada. A key differentiator for DWX is its emphasis on mid-cap companies, alongside larger firms, offering a multi-cap approach.
Ultimately, these four ETFs demonstrate that investors don’t necessarily have to choose between income and growth. By strategically diversifying through international dividend ETFs, investors can potentially achieve both, navigating the complexities of the global market with a balanced and potentially rewarding approach.
