Dividend payers outside the U.S. are worth a look.
The U.S. stock market has been increasingly volatile over the last several weeks. And unsurprisingly, that has led many investors to look for a different strategy, including buying stock overseas. Japan and Europe aren’t completely insulated from the recent turmoil, but are perhaps better off than stocks in China. Others wonder whether it’s time to rely on stable dividend stocks to weather the storm. Both strategies have their merits. But you don’t have to decide between a global strategy and one focused on income. There are a bunch of high-quality international stocks that pay a good annual dividend to boot. Here are eight of them to consider.
BP (ticker: BP)
U.K.-based energy giant BP isn’t quite the size of domestic big oil stocks like Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX). But at almost $150 billion in market value, BP is plenty big enough for those who want an entrenched company with a strong balance sheet. More importantly, with a generous dividend of 59.5 cents per share each quarter, this oil stock yields much more than its U.S. counterparts. And with crude oil prices hovering above $60 in 2018 after a few years of weak performance, there’s good reason to think this dividend is not just sustainable, but ripe for an increase.
Current yield: 6.2 percent
GlaxoSmithKline plc (GSK)
This is another U.K. company that is well-known among American consumers and investors alike. And once again, while this drugmaker isn’t as large as some of the megacap big pharma names domiciled in the U.S., it is plenty big and plenty stable. It is a mainstay of the health care sector, with a large portfolio of prescription drugs and vaccines, as well as consumer brands like Sensodyne toothpaste and NicoDerm smoking cessation products. And with almost $4 billion in cash on hand, the company has a nice cushion to fall back on if times get tough.
Current yield: 7 percent
Nestle (NSRGY)
Nestle is a Swiss consumer powerhouse, with brands that dominate in the U.S. like Gerber baby foods and Coffee-mate creamers, as well as a strong customer base in Europe. This makes it incredibly stable, regardless of the broader economic or market environment. A few things to keep in mind, however. First, NSRGY is not listed on a major U.S. exchange like the New York Stock Exchange or Nasdaq composite. Secondly, Nestle doesn’t pay consistent quarterly dividends like many U.S. corporations and instead pays it in one big annual sum. But that still adds up to a nice yield better than some other consumer stocks, if you’re patient enough to wait.
Current yield: 3.1 percent
Diageo (DEO)
International spirits powerhouse Diageo owns brands that dominate every market around the world, including Johnnie Walker whiskey, Smirnoff vodka, Tanqueray gin and Guinness beer. Beverage tastes have moved away from beer and toward spirits in recent years, fueling growth both in the developed world but also in big growth markets like China. This strong demand generates more than $3 billion annually in free cash flow, which in turn powers a reliable dividend for shareholders. The payouts have roughly doubled in the last 10 years, and DEO stock should continue to offer a growing dividend in the future.
Current yield: 2.6 percent
Vodafone Group (VOD)
Vodafone is a telecommunications powerhouse that may be a better bet than U.S. megacaps AT&T (T) or Comcast Corp. (CMCSA). That’s because its operations span Europe, Asia and Africa to serve a massive 515 million mobile users and 18 million broadband customers, on top of a 14 million cable TV base. The fact that the TV arm of Vodafone is relatively small is a huge plus, considering the decline in cable subscriptions. This stock also boasts a dividend that is more than 6 percent to roughly triple the income potential of the average Standard & Poor’s 500 index component.
Current yield: 6.2 percent
Unilever (UL)
Unilever is a consumer powerhouse with brands that connect in every region of the world. Products most popular here in the U.S. include Dove body soap, Ben & Jerry’s ice cream and Vaseline personal care products. Unilever also is maintaining its presence in households with recent acquisitions, such as niche toothpaste company Schmidt’s, to meet increasing demand for natural and organic products. Unilever is highly profitable, clearing over $5 billion annually in free cash flow and showing a deep commitment to shareholders with a $6 billion share repurchase plan announced last year on top of a generous dividend.
Current yield: 3.1 percent
Toronto-Dominion Bank (TD)
A high-yield Canadian bank with a strong balance sheet, TD offers a great alternative to American financial stocks. It has a stable consumer banking arm that provides regular revenue and profits, but also has its fingers in other pies including ownership of the TD Ameritrade investing platform. Canadian financials benefit from many of the same strong consumer trends as American banks; however, they tend to take less risk thanks to a different regulatory structure north of the border. That means this dividend stock could be a safer bet than the typical U.S. financial if things get rocky in 2018.
Current yield: 3.6 percent
British American Tobacco (BTI)
Investors who moralized over the health risks of cigarettes have missed out on the continued stability and income potential of the sector over the last two decades. While U.S. giants like Philip Morris International (PM) are doing just fine, BTI offers a great alternative because it is an overseas play — particularly on emerging markets. China and India are huge markets for British American Tobacco. After its recent acquisition of Reynolds American in 2017, BTI now owns some giant U.S. brands, such as Camel and Newport, to take to these emerging markets in the coming years and continue a reliable revenue stream.
Current yield: 5 percent
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8 Overseas Dividend Stocks to Watch originally appeared on usnews.com
