Ryan Jackson: Financial advisor A points out that foreign stocks look historically cheap compared to their US peers. Forgoing them for US stocks would be passing on a rare buy-low opportunity.
Financial advisor B claims that foreign stocks face hurdles that US firms do not. Poor returns over the past 15 years should be evidence enough that investing overseas means leaving money on the table.
So, who’s right? It’s hard to say, and the debate over foreign stocks’ future is more nuanced than our fictitious advisors let on. But for investors who find today’s valuations more compelling than yesterday’s returns, international dividend ETFs may be worth a look. Here are three of the best.
3 Great International Dividend ETFs for 2025
- Vanguard International High Dividend Yield Index ETF VYMI
- Schwab International Dividend Equity ETF SCHY
- Vanguard Total International Stock ETF, ticker VXUS
Let’s start with Vanguard International High Dividend Yield Index ETF. It trades under the ticker VYMI and earns a Morningstar Medalist Rating of Silver.
This strategy scans all the large- and mid-cap stocks outside the US that pay dividends, sweeps in the higher-yielding half, and weights them by market cap.
Simplicity is a virtue for this fund. Targeting half the dividend-paying universe means this fund routinely tallies more than 1,500 holdings. That limits the influence of struggling companies that may be cheap for good reasons. Plus, market-cap weighting pulls the portfolio toward larger, more stable firms that can weather the market’s storms and continue paying out dividends. This weighting approach and broad reach should protect investors from the perils of high-yield investing.
Schwab International Dividend Equity ETF SCHY is next up. It charges just 14 basis points per year, one reason why it also earns a Silver Medalist Rating.
This index strategy targets stocks with high dividend yields, strong profitability and free cash flow, low volatility, and a long history of cash dividend payments. It also uses constraints to prevent concentration—an important step since only 100 companies crack the portfolio.
Rigorous stock selection helps the fund balance quality against dividends. It tends to generate stronger profitability metrics than its peers, a trait that surfaces through its lower volatility. The fund yielded 4.5% over the 12 months through January 2025. Pairing profits with dividends should help the fund find its footing after a challenging couple of years.
Let’s close out today with Vanguard Total International Stock ETF, ticker VXUS. This Gold-rated strategy is not built around dividends like VYMI or SCHY. Yet it makes today’s list because 84% of investable foreign stocks paid out dividends in 2024, compared to just two thirds of US companies.
Price sets this fund apart. It levies an annual expense ratio of just 5 basis points, one of the very cheapest investors can get their hands on. The index strategy targets large-, mid-, and small-cap stocks from emerging and developed markets, pulling in north of 8,000 companies. They are weighted by market cap, leveraging the market’s collective wisdom and keeping its riskiest participants under control.
Whether now is the time to invest in foreign stocks is a question for another video. But for investors that are torn between advisors A and B, perhaps yield can be a tiebreaker. VXUS yielded about 3.3% over the 12 months through January 2025, compared to 1.2% for ETFs that track the S&P 500.
Watch 3 ETFs Full of Wide-Moat Stocks for more from Ryan Jackson.