Argus

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May 04, 2026

Sector(s)

Financial Services, Basic Materials, Technology, Industrials

Summary

U.S. stocks are trading near record highs - but despite the strong performance, they are being bested by global emerging stocks. A leading industrialized global stock market index, the ETF EAFE (EFA), is up 6% year to date, while the leading emerging market ETF (EEM) has gained 17%. The S&P 500 is no slacker, up 6% year to date, but still below the global emerging stocks. With continued worries over the state of the U.S. economy and some talk of stagflation, global stocks, and especially those that pay dividends, are an option for investors. The lagging U.S. markets represent a change from the recent record. Over the past five years, the S&P 500 has advanced 70% compared to a 28% gain in EAFE and a 14% gain in EEM. But the underperformance has given global stocks a valuation advantage, particularly in the area of dividends. Consider that the EAFE dividend yield of 3.35% is roughly 225 basis points higher than the comparable S&P 500 dividend yield. We think global dividend stocks continue to offer opportunity. In our view, investing in international income stocks is one way to increase portfolio diversification while reducing sensitivity to volatile U.S interest rates. That said, investing in overseas stocks carries its own set of risks, including the impact of currency exchange and geopolitical turmoil. But there are also a number of positives in

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