CI Morningstar International Value ETF Offers Strong Yield and Growth Potential Amid Global Markets

Investors seeking a blend of income and capital appreciation in a hedged international portfolio may find the CI Morningstar International Value Index ETF (CAD Hedged) (ticker: VXM.B) an intriguing option. With its recent declaration of a CAD 0.4633 dividend for June 2025, the ETF now offers a compelling yield of 3.13%, supported by its robust track record and strategic positioning in value-oriented equities.

Attractive Yield: A Steady Income Stream

The ETF's June dividend of $0.4633 per unit underscores its commitment to regular cash distributions. Based on its current price of $37.05 (as of June 20, 2025), the annualized yield of 3.13% places it competitively among Canadian-listed ETFs. This dividend yield is particularly appealing in a low-yield environment, offering investors steady income without excessive volatility.

The ETF's dividend-paying capacity is tied to its underlying portfolio of international value stocks. By tracking the Morningstar International Value Index, the fund focuses on companies trading at discounts to their intrinsic worth, a strategy that has historically provided both income and long-term growth.

Capital Appreciation: Strong Performance and Upside Potential

Beyond dividends, the ETF has demonstrated solid capital appreciation. Year-to-date (YTD), it has returned 20.02%, outperforming broader international equity benchmarks. Its one-year percentage change of 22.6% reflects resilience in volatile markets, driven by a portfolio skewed toward sectors like financials, industrials, and energy—areas that have benefited from global economic recovery and sector-specific tailwinds.

Looking ahead, the ETF's valuation metrics suggest further upside. With a 52-week trading range of $28.28 to $38.06, the current price of $37.05 is near the upper end of this band, but its historical bullish trend (up 22% annually since 2013) hints at continued growth potential. Deep learning models predict a 15.93% increase over the next year, projecting a price of $42.89 by June 2026, though investors should note these are forecasts and not guarantees.

Valuation and Risk Considerations

While the ETF's yield and growth prospects are compelling, investors must weigh its risk profile. The fund's annual volatility (measured by standard deviation) aligns with its benchmark, and its CAD hedging mechanism mitigates currency risk for Canadian investors. However, international equities remain exposed to geopolitical risks and sector-specific downturns.

The ETF's low MER of 0.45% ensures cost efficiency, allowing more returns to flow to investors. Additionally, its dividend consistency—with distributions increasing steadily over the past three years—adds credibility to its income proposition.

Investment Recommendation

The CI Morningstar International Value ETF (VXM.B) presents a balanced opportunity for investors prioritizing both income and growth. Its 3.13% yield offers reliable cash flow, while its strong historical returns and favorable valuation suggest capital appreciation potential.

Consider these strategies:
- Income-focused investors: Use the ETF as a core holding to diversify into international value stocks while benefiting from CAD hedging.
- Growth-oriented investors: Pair the ETF with broader market exposure to capitalize on its sector-specific upside.
- Risk management: Monitor geopolitical risks and rebalance portfolios if the ETF's price approaches the upper end of its forecast range.

Final Thoughts

In a world where steady income and growth are hard to find, the CI Morningstar International Value Index ETF stands out. Its blend of a competitive yield, proven performance, and strategic hedging makes it a worthwhile addition to portfolios seeking global diversification. As always, investors should review the prospectus for detailed risk disclosures and consider consulting a financial advisor before making decisions.

Invest wisely, and keep an eye on that June 24 ex-dividend date—a reminder that income and growth can coexist in the right ETF.