High-Yield International ETFs Beating the S&P 500 This Year

Market backdrop: Inflation cools, rates stay elevated, and income matters more

The U.S. money markets and equity traders have spent the past year weighing stubborn inflation against a still-ambitious path for interest rates. With the 10-year Treasury hovering in the mid-4% range, many investors shifted focus from pure growth to reliable income and international diversification. In that environment, a quartet of high-yield international ETFs has drawn attention for their ability to combine dividend streams with exposure to non-U.S. economies.

Analysts note that high-yield international etfs beating the broad U.S. market aren’t just about higher payouts. They offer currency exposure and sector tilts that can dampen U.S.-centric risk, especially when domestic energy and financials swing with global demand. As one portfolio strategist put it, "Investors are chasing income, but they’re also fishing for diversification that works when the dollar moves and global growth shifts gears."

Four high-yield international ETFs beating the S&P 500

Across the landscape, four funds stand out for combining solid income with a track record of outperforming the S&P 500 over the trailing 12 months. Data reflect a mix of yield, expense discipline, and sector concentration that has helped these funds navigate a challenging rate environment.

Schwab International Dividend Equity ETF (SCHY) — Broad global income, lean costs

• Yield: around 3.5%
• Assets: approximately $2.3 billion
• Expense ratio: about 0.08%
• 12-month return: near 26%

SCHY offers a diversified basket of international dividend payers, with a tilt toward well-capitalized developed markets. The fund’s low expense ratio helps its income stream compound, making it a popular pick for investors who want broad exposure without paying up for active management. A portfolio manager notes that SCHY’s diversification across sectors has helped it weather regional swings while still delivering solid year-over-year gains.

Fidelity International High Dividend ETF (FIDI) — High conviction, dividend-focused

• Yield: about 3.8%
• Assets: roughly $3.7 billion
• Expense ratio: around 0.29%
• 12-month return: about 28%

FIDI concentrates on international equities with above-average dividend yields, often emphasizing financials and energy-linked sectors. Its strategy tends to tilt toward firms with durable cash flows and the capacity to sustain payouts through cyclical headwinds. An industry veteran points out that FIDI’s approach—selecting firms with steady dividend histories—has helped the fund capture income while staying aligned with global growth trends.

iShares International Select Dividend ETF (IDV) — Currency and income mix

• Yield: around 4.9%
• Assets: in the tens of billions
• Expense ratio: about 0.40%
• 12-month return: near 21%

IDV stands out for its focus on established, high-yielding international names and the associated currency exposure. The fund’s larger asset base offers liquidity that can be appealing in uncertain markets. A market strategist notes that IDV’s higher yield and global diversification can complement a core U.S. equity sleeve, especially for investors seeking cash flow and foreign exposure both.

Vanguard International High Dividend ETF (VYMI) — Balanced yield with broad coverage

• Yield: about 4.2%
• Assets: around $5.0 billion
• Expense ratio: roughly 0.10%
• 12-month return: about 24%

VYMI provides broad exposure to high-dividend companies outside the United States, with a fee-light structure typical of Vanguard products. The fund’s diversified mix helps smooth out country-specific risks while delivering a steady income edge. Investors seeking a straightforward, low-cost way to tap global dividend incomes have increasingly turned to VYMI as part of a diversified income strategy.

What’s driving the outperformance?

Several threads explain why these high-yield international etfs beating the S&P 500 have attracted attention lately. First, many non-U.S. markets offer attractively priced dividend payers when growth narratives elsewhere look more modest. Second, a handful of sectors—financials, energy, and utilities—tend to carry higher dividend yields, which these funds opportunistically tilt toward when earnings visibility improves.

Currency movements also influence performance. When the dollar weakens vs. a basket of foreign currencies, returns from international holdings can rise in U.S. dollar terms, lifting reported performance for global dividend funds. A few fund managers emphasized that currency hedging is not the main driver, but it adds a layer of potential upside during periods of favorable forex moves.

Why investors are paying attention to high-yield international etfs beating

For income-focused investors, the appeal of high-yield international etfs beating the S&P 500 is twofold: higher cash yields and broader geographic diversification. As rates stay elevated, the lure of reliable income compounds in ways that pure price appreciation cannot. A senior analyst with a cross-border investing desk puts it plainly: "You get more income without sacrificing diversification when you look beyond U.S. borders."

Risks to watch

With any high-yield strategy, risk persists. Currency volatility can erode returns after hedging or during sudden moves in exchange rates. Additionally, some international dividend funds lean toward sectors sensitive to commodity cycles or regulatory changes, which can magnify drawdowns during downturns in those markets.

Investors should also consider the tax implications of foreign-source income and the impact of management style on performance. While the four funds highlighted offer compelling income, their yields come with different levels of volatility and beta relative to the global equity baseline. A balanced approach—combining these funds with core U.S. holdings and bonds—can help manage downside risk while preserving the potential for beat-the-market income.

How to use high-yield international etfs beating in a portfolio

• Anchor allocation: Use one international high-yield ETF as a core income sleeve, not a sole driver of returns.
• Diversification: Combine funds with differing sector tilts and currency profiles to spread risk across regions.
• Risk control: Pair with U.S. dividend growth plays or broad equity ETFs to balance income stability with growth potential.
• Trade-offs: Be mindful of expense ratios, especially for funds with higher yields; a small difference in fees can compound over time.

Bottom line

In a market where yields remain elevated and investors seek both income and diversification, high-yield international etfs beating the S&P 500 offer a compelling option. The four funds highlighted here—SCHY, FIDI, IDV, and VYMI—show how dividend-focused, globally exposed portfolios can outperform the broad U.S. equity index while delivering cash flow to a stubbornly rate-sensitive audience. As always, the key is to align these holdings with a well-constructed plan that balances income needs, risk tolerance, and the long-run goal of a durable retirement strategy.