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ZPRG (SPDR Global Dividend Aristocrats): ETF review — the world's dividend aristocrats

6 min readCompound

Key takeaways

What the fund tracks

The S&P Global Dividend Aristocrats index requires a company to have grown or maintained its dividend for at least 10 consecutive years. This criterion automatically filters out financially distressed companies — if a company stops increasing its dividend, the index removes it at the next revision. The result is a portfolio of high-quality, mature companies from financials, industrials, energy and consumer staples. The index is geographically global — it covers the US, Europe, Asia and Australia.

Key parameters

ZPRG is a distributing fund with Irish domicile (ISIN starts with IE). Dividends are paid to investors — automatic reinvestment does not occur. Always verify the current TER on justETF. State Street is one of the world's largest asset managers and the fund has sufficient liquidity for an ordinary retail investor.

Taxes on dividends: Each payment is taxable income. Irish domicile means 15% withholding on US components. The Czech portion is handled in the tax return. More in the article taxes on ETFs in the Czech Republic.

Aristocrats vs. high yield

The key difference between ZPRG and funds like VHYL lies in the selection criterion. VHYL selects companies by the level of dividend yield — the result can be a portfolio of high-yield companies with unstable payments. ZPRG selects by payment history — a low but growing and reliable yield is more valuable than a high but fragile one. For an investor this means fewer surprises in the form of sudden dividend cuts.

Who it suits

ZPRG fits investors who:

Risks and limitations

Even aristocratic companies can cut their dividend — in the 2020 crisis many traditionally stable payers did exactly that. The fund also underweights fast-growing sectors (technology) that do not pay dividends or have a low yield. In a growth-stock bull market ZPRG therefore lags a broader index. Total return (price plus dividends) must be tracked. A comparison of dividend strategies is in the article dividend aristocrats.

Role in a portfolio

ZPRG is most often combined with a core broad-market ETF such as IWDA. It adds an income component and somewhat stabilises portfolio volatility thanks to its more conservative company selection. On the ETF overview you will find further dividend alternatives.

FAQ

How are companies selected for the S&P Global Dividend Aristocrats index?

The index requires at least 10 consecutive years of dividend growth or maintenance. Companies must also meet minimum liquidity and market capitalisation criteria. The index is rebalanced quarterly.

Is ZPRG safer than other dividend funds?

The aristocratic approach reduces the risk of a sudden dividend cut, but cannot eliminate it entirely. In an economic crisis even long-standing payers can suspend their dividend — as 2020 showed.

Can I combine ZPRG with VHYL?

Yes, but the overlap is high — both funds hold similar types of companies. If you want both, have a clear reason for the combination. I would rather recommend choosing one and pairing it with a differently focused ETF.

How are dividends from ZPRG taxed?

ZPRG has Irish domicile — 15% withholding tax is deducted on US components. Investors then declare the dividend income in their tax return and pay the applicable rate (with the possibility of crediting foreign tax paid). Details in the article on ETF taxation.

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