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The year 2023 is shaping up to be more prosperous for investors than 2022, but we’re still living in a volatile world.

The Russia-Ukraine war is getting deadlier, global inflation is falling but remains elevated, China and the U.S. are getting mired into a new Cold War, North Korea is ratting its nuclear saber, central bankers around the world are hawkish…the litany goes on.

Where can an investor turn for robust and safe dividends? Below, I’ll explain why you should look overseas. I’ll also pinpoint a global dividend exchange-traded fund (ETF) that’s a compelling buy right now.

Good news in unlikely places…

One place you wouldn’t expect to find good news is overseas markets. However, the MCSI EAFA (EFA) has posted a year-to-date daily total return of 7.54%, compared to 6.75% for the SPDR S&P 500 ETF Trust (SPY), as of market close February 21. The EAFA captures large- and mid-cap equity representation across 21 developed countries excluding the U.S. and Canada.

Amid all the geopolitical risks I’ve just cited, why are investors increasingly bullish on supposedly riskier markets as opposed to U.S. stocks or bonds?

For starters, there isn’t as much risk as one might think. Russian President Vladimir Putin won’t quit his bloody war of conquest in Ukraine anytime soon, but Putin has inadvertently brought Western allies closer together than they’ve been in decades.

NATO is showing greater unanimity, purpose, and cohesion. The European Union is weathering Putin’s energy blackmail far better than expected, and the global economy is projected to show growth this year.

As relationships are rethought, it now appears that the markets will have time to adapt accordingly, instead of getting ambushed. Considering that investors hate uncertainty, that’s good news.

If you’ve been holed up in U.S. stocks, or maybe even gold, this is a good opportunity to branch out into other parts of the world. How can you partake of growth but still protect your portfolio? International diversification is key. If you want to tap market-beating growth that isn’t overly reliant on U.S. economic indicators, go global.

The International Monetary Fund (IMF) this month revised upwards its global growth projections for 2023. In its latest update, the IMF estimated that the global economy will grow 2.9% this year, an improvement from the 2.7% expansion the group had forecast in October 2022.

According to the World Bank, the U.S. accounts for about 55% of the world’s stock market value. That means 45% (to the tune of more than $40 trillion) resides overseas. In fact, 80% of the world’s publicly traded companies are foreign based, compared with 20% headquartered in the U.S. As an investor, you can’t afford to be parochial.

A lot of global dividend ETFs are looking good right now, outperforming U.S. equity benchmarks and with plenty of room left for growth.

A best-of-breed example now is the iShares International Select Dividend ETF (IDV).

With net assets of more than $5 billion, IDV tends to invest in blue-chip companies that offer decent value propositions and have a consistent history of paying reliable dividends. These holdings also represent a wide variety of sectors.

Here’s a snapshot of the fund’s top five holdings:

IDV avoids emerging markets, with all its 100 or so holdings based in the developed world, including Asia. Accordingly, you get the greater relative safety of a diversified portfolio based in lower-risk parts of the world, plus a decent yield to boot.

The iShares International Select Dividend ETF currently yields a juicy 6.86%, compared to the dividend yield of 1.56% for the SPY. And despite its income-oriented mission, IDV also has generated a respectable year-to-date daily total return of 4.60%.

IDV’s combination of growth and income is hard to beat. The fund’s expense ratio is a reasonable 0.49%.

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John Persinos is the editorial director of Investing Daily.

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