The dividend.com foreign dividends stock page tracks companies that are based outside the United States but have shares that trade on US exchanges. These shares are called ADRs ( American Depository Receipts).
For some US investors, the idea of investing in foreign stocks can be very intriguing. In the past, there have been several foreign exchanges that have produced enormous returns to investors. Although investing abroad can result in high returns, it also comes with a significant amount of risk and is not for everyone.
G-20 Dividend Yields
Source: The Dividend Signal Uncovering Global Growth Opportunities, Salient Partners
Dividend yields are much higher abroad. Theoretically, developed countries should have higher yields than emerging markets, as they have more companies that have matured in their respective industries and are thus declaring higher payouts. This holds true in most cases: Australia tops the list with the highest yield, while Canada, the United Kingdom, and Italy also have higher yields.
We track over 280 dividend stocks. Below we screened five foreign dividend stocks that are yielding over 4% from G-20 countries that are ranked above the United States in the chart shown above.
GlaxoSmithKline plc - Yield 5.46%
GlaxoSmithKline (GSK ) is a global healthcare group. The company focuses on the creation, discovery, development, manufacture, and marketing of pharmaceutical products, including vaccines, over-the-counter (OTC) medicines and health related consumer products. GSK was founded in 1999, and is based in the UK.
Glaxo yields 5.46%, as it pays $2.20 annually. It trades at a P/E of 16.68 based on 2016 earnings per share estimate of $2.56. Glaxo has been paying dividends since 2001 and has had a 4.4% annualized growth in dividends over the last five years.
BCE Inc - Yield 4.69%
BCE (BCE ) is a Canadian communications company that focuses on residential, business, and wholesale customers. The Company operates in four segments: Bell Wireline, Bell Wireless, Bell Media and Bell Aliant. BCE currently yields 5.88% with an annual payout of $2.73. It is trading at $46.40, very near it’s 52 week high of $47.55. BCE has a payout ratio of greater than 100%.
National Grid Plc - Yield 5.44%
National Grid PLC (NGG ) is a UK-based international electricity and gas company. NGG operates in segments, including UK transmission, UK gas distribution, US regulated, and other activities.
Like most utilities, NGG has a payout ratio in the mid-50s. It pays a semiannual dividend of $4.05 and is expected to deliver a 4% growth in bottom line ‒ from $4.31 EPS in 2016 to $4.50 EPS in 2017. This is an excellent value pick, since the stock trades for only 16.5 P/E. Most dividend paying utilities are trading above 20 P/E and don’t even deliver half the yield that NGG provides.
Total SA - Yield 5.57%
Total (TOT ) is a French integrated oil and gas company worldwide. The company operates in three segments: upstream, downstream, and chemicals, and it operates in 130 countries.
Trading at a P/E of 17 based on 2016 earnings estimates of $2.92, Total SA pays a dividend of $2.73 per share, which pushes its yield to over 5.5%. It’s expected earnings in 2017 are $4.08, which points to a 39% growth in earnings. Such double-digit growth estimates for oil and gas companies has been a common feature across the board. TOT has a payout ratio of 94% as of today. It’s one year price performance has been -2.95%.
BP PLC - Yield 7.59%
BP PLC (BP ) is a British multinational oil and gas company. The company provides its customers with fuel for transportation, energy for heat and light, lubricants and the petrochemicals products used to make everyday items like plastic bottles. BP also invests in renewable energy sources. The company operates in two business segments: Exploration and Production, and Refining and Marketing. BP currently yields 7.59%. The drop in share price is partially responsible for high oil and gas dividend yields.
The Bottom Line
Approximately only 10% of the average US investor’s portfolio is made up of foreign stocks, so investing abroad is not essential for all investors. However, for investors who would like to consider more investment opportunities or diversify even more than usual, it is not a bad idea to seek international investments. The two biggest reasons why US investors seek international investments are diversification and growth.