ETF Battle: DIVI vs. VYMI - International dividend stocks - Who wins?

After many years of underperformance, international stocks have turned it around and are thus far outperforming US stocks in 2025. Statisticians call that reversion to the mean. But what if we throw in some dividends to spice things up? Well, today's audience requested ETF matchup features a head-to-head contest between international equity dividend ETFs from Franklin Templeton and Vanguard. So, who wins the battle? Find out right after this. You're watching ETF Battles. I'm Rod Delegi and this is season 6 and I hope everyone's doing well.

If there's an ETF battle that you'd like to see, be sure to send me your ETF tickers in the comment section below or on our X feed at ETF guide. Also, be sure that your ETFs have a performance history of at least one year. We don't want to be analyzing ETFs that don't yet have a performance history of at least one year. It's just very difficult to really be able to complete the analysis without that. So, just keep that in mind.

Also, be sure to visit the description section below. I've got links to our program judges. Get in touch. Plus, I've got a link to our program sponsor, Direction, and you can also visit direction.com. They continue to expand their ETF lineup. Keep in mind, this is a lineup that doesn't just include the leverage and inverse ETFs on broader indexes and sector indexes, but also single stocks. And we've seen that lineup expand. So, be sure to check that out.

Finally, ETFK Retire, our 401k solution for ETF investors. All of that in the description section below. So today's audience requested ETF battle is from a viewer named Michael and it's between international dividend ETFs from Franklin Templeton and Vanguard. Thank you so much Michael for this excellent suggestion and helping us to sort through the tabernacle of turmoil is a duo extraordinaire. We've got Shane Sisle with Banrian Capital and David Durking with the Street.com judges. So great to have you back. Good to be here. Yeah, good to see you guys again. Thanks.

So, we're going to blaze through our four battle categories, giving each of you an opportunity to give us your preferred ETF. For the mystery category, our judges can choose a certain factor or thing that they feel is important to today's matchup. Our judges can also nominate wildcard ETFs if they feel there's a better choice somewhere else. Well, keep in mind one final thing before we get started that none of the battle outcomes are ever known in advance by myself or our judges. The first category is cost. Shaina, please get us started.

Well, with this particular one, it's pretty easy. I love that I'm finally getting a battle that's only two funds. Sometimes there's like three or four, and that makes everything way more complicated. This is just easy. So it's divy is for the win for me with nine basis points is its expense ratio. It's spread versus by is not all that dissimilar. With 1.3 billion in assets, it trades very easily. It has plenty of liquidity here. So, VMI's expense ratio 17 basis points, substantially higher. And so, this is a pretty easy winner for me. Divvy is the winner. That's a great start. Thank you, Shaya. Dave, how do you see it in terms of cost?

Well, I'm actually going to go with VMI on this one. Shane got all the numbers right. I just like that VMI is more liquid, a little more tradable. It's got the substantially higher asset base, so that tends to reduce spreads and trading costs a little bit. Total cost of ownership is pretty close on those, but I'm just going to lean towards the Vanguard fund based on liquidity. That takes us next to exposure strategy. Dave, you're still up. So, break it down for us. How do these two ETFs compare?

Yeah, I've never been a big fan of VM or VMI just because I think their strategy is just a little too broad, a little too unfocused. It does look at forward dividend yields, so that's a good thing. It's not looking at trailing yields. But it starts with its universe and it ranks everything by yield and the top half make the fund and then it's cap weighted. So, I'd argue you don't really get as good a high yield strategy as you could by including that many stocks in the portfolio. And I don't think that cap weighting is necessarily the best way to do it either because it sort of neuters the fact that you're focusing on high yielders to begin with. So, I'm not necessarily a fan of VMI here.

Divvy I don't think is necessarily a whole lot better. It takes a pretty broad approach although it does do some optimization to sort of reduce concentration risk and things like that. So I'm going to introduce rather a wild card in this one. I'm going to go with the Schwab International Dividend Equity ETF CHY. And I'm sure anybody who's invested in dividend ETFs knows about SCHD. That's the US version of this one. Sey is the international version.

It takes a approach where it looks at dividend growth history. It looks at cash flows and roe to give it a good quality tilt on there. It looks at yield as well and it concentrates that down into the final 100 stocks that have the best composition score of all these factors. So I think with SCHY, you get the high yield that you're looking for from international stocks, but you got sort of the background check of looking at quality and dividend growth on there as well. So I think you got a little more of a robust strategy. So I'm going to go with SCY is the winner in this one. Thank you, Dave, and appreciate that wild card nomination. Shaina, you're up next. Give us your analysis.

So I'm going to agree with everything that Dave just said. I'm going to add just a little bit more color. Again, these are both passively managed funds that are replicating an underlying index. They're not really doing any active selection or anything of that nature. The main differences I can see between the two funds is one is developed country only and the other one includes emerging markets. It doesn't seem to be making much of a difference in the overall returns or composition in terms of the sector and industry waitings but there is emerging markets in the Vanguard product and there is not emerging markets in the Franklin product.

I also find it interesting that Franklin is an ex North America. So it does not include Mexico or Canada whereas the Vanguard one's just ex USS. So it would include any other North American country beside the US. So it's got a broader mandate which probably is what drives the significantly more holdings that it has at almost 1500 names. It says it uses a sampling effect, but I don't know how much of a sampling it is when you've got 1500 names. Whereas the divvy fund still has a ton of names, 440 plus.

So both of these funds are big funds with a lot of holdings. They, you know, the Franklin one's looking at trailing 12 months, the Vanguard one's looking at forward 12 months. But those are the little differences between the two. Despite all of that, their performance returns are pretty similar. To be honest, Vanguard will do a little bit better when emerging markets is outperforming. But I agree with Dave. I don't like this kind of like very broad net that they throw out there. I think there are better ways to do this.

I agree with the wild card that Dave put out there. I'm going to throw out a different wild card. It's actually a really small fund, so it might not be for everybody, but when I look at it, I like the active management and the more concentrated nature of it. And that is the Global X, MSCI super dividend ETF, ticker EFAS. It only has 50 names in it. And it's much more concentrated. It's equal weighted, so you don't have a market cap bias. It is just developed. So it does reduce the risk of the emerging markets and it does screen for consistency and stability of the dividend and does not invest in anything that's yield is under 5%.

So on that alone it's going to have a higher yield than any of the funds in the battle because they're just looking at the highest in a very large universe which is going to kind of water down the potential yield opportunity. But it is a really small fund with a high expense ratio. So just cautious on that end. But when I'm thinking about what I'm looking for, I'd want a slightly more concentrated if I'm going to be focused on dividends, I really want a focused product on dividends. And so that's why I'm going to throw out EFAS as my wild card here. Again, with the caveat that it is a small fund with a high expense ratio. I think methodology wise and exposure strategy. There's a lot to like with that fund though. Makes sense. And you mentioned earlier sampling, index sampling. Maybe you can just clarify to some of our audience members that might not be familiar with how that works. What what is sampling?

So sampling is just a fancy word for optimization. So they're not actually owning the underlying index. They're creating an optimized strategy and then sampling names out of it. So it's not holding everything in the index. It's just looking to replicate the exposures on a high level. So it may or may not look exactly like the index. Just because you do sample doesn't mean that you won't look like the index. I helped build an optimization tool when I was at Orion that I used quite a bit. And it didn't necessarily mean I didn't buy all the things in the index, but sometimes just from an optimization standpoint, if it's a very small waiting in the index or something like that or something that's hard to trade, you might leave it out. I will note that Vanguard does not invest in REITs. So by Vanguar...