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Some European Dividend Dynamos Reside in This ETF

BY | ETF Database
8:43 am ET 09/10/26 | 6 VIEWS
As measured by some bellwether ETFs, 2026 has been a decent year for European stocks. The largest ETF in Europe stock category is higher by 9.9%, trailing the MSCI EAFE Index by 280 basis points.That gap highlights the potential allure of the ALPS O’Shares International Developed Quality Dividend ETF (OEFA), which as its name implies, is a quality dividend spin on the MSCI EAFE Index. OEFA tracks the O’Shares International Developed Quality Dividend Index. Taking some cues from the MSCI gauge, OEFA’s benchmark allocates 18% of its weight to Japanese stocks. However, the fund is Europe-heavy. More important is the fact that some of that continent’s most venerable and potentially some of its best dividend payers call OEFA home.OEFA a Winning Choice for ex-US DividendsMany international dividend ETFs emphasize yield, but that methodology carries some risk because it can expose investors to yield traps that eventually become dividend offenders. OEFA mitigates some of that risk by focusing on quality and where there’s quality, favorable cash flow traits often follow. Take the case of OEFA holding Rolls Royce. “With free cash flow now structurally higher, the company has moved to a more regular shareholder return framework,” said Loredana Muharremi, equity analyst for Morningstar. “After resuming dividends in 2024, Rolls-Royce delivered a 2025 dividend of 9.5p per share and reiterated a target payout ratio of 30%-40% of underlying profit. In addition, it completed a £1 billion share buyback in 2025 and has committed to a multiyear £7 billion‑£9 billion buyback over 2026‑28, which is intended to be funded from free cash flow.” Banking giant HSBC, OEFA’s second-largest holding, is another example of a sturdy European dividend payer supporting the long-term case for the ALPS ETF. “HSBC has been making larger shareholder distributions through buybacks and dividends in the past few years as its earnings improved, which we view as appropriate,” noted Morningstar’s Kathy Chan. OEFA, which turned 11 years old last month, allocates 31.6% of its weight to industrial stocks and another 28.67% to consumer cyclical and healthcare names. For more news, information, and analysis, visit the ETF Building Blocks Content Hub. VettaFi LLC (“VettaFi”) is the index provider for OEFA, for which it receives an index licensing fee. However, OEFA is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OEFA.

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