Income investors have global choices. Many dividend stock investors focus on low-risk U.S. businesses they know, including consumer staples and health care players with big brand recognition. However, it’s important to remember that it’s a…
Income investors have global choices.
Many dividend stock investors focus on low-risk U.S. businesses they know, including consumer staples and health care players with big brand recognition. However, it’s important to remember that it’s a great big world and plenty of overseas stocks have equally strong operations and income potential as American corporations. There are a host of strong global dividend stocks that are easily accessible through your brokerage or retirement account. And in some cases, these dividend investments offer better yield or more stability than the domestic names you may be more familiar with. Here are nine stocks to consider if you’re looking to add an international flavor to your dividend investments.
While American investors may recognize its subsidiary TD Ameritrade, Toronto-Dominion Bank is a $100 billion financial company north of the border. TD is more consumer-focused than many big banks like JPMorgan Chase & Co. (JPM) that make money outside traditional retail banking. While that may mean less dramatic performance, it also means a reliable and loyal customer base to fuel consistent dividend growth, and a less risky operation as a whole. TD has grown payouts from a split-adjusted dividend of about 29 cents before the financial crisis to 67 cents quarterly at present, with a lot of potential for long-term income investors.
England pharmaceutical giant GlaxoSmithKline may have an overseas headquarters, but is very much a brand that has power with American consumers and health care providers. Its Aquafresh toothpaste and Tums antacids complement pharmaceuticals such as shingles vaccine Shingrix and HIV treatment Juluca that offer higher margin sales at the pharmacy. U.K. stocks typically offer generous dividends as a group, given the strong culture of providing income to shareholders to support pensions in the region. That’s a philosophy that U.S. investors should embrace.
Another drug manufacturer worth watching is Switzerland-based Novartis. It is one of the strongest names in health care, with a suite of blockbuster medications that include its Gilenya treatment for multiple sclerosis and Cosentyx for psoriasis and related arthritis. NVS continues to grow and evolve its product line with research and acquisitions. Its wide array of medicines allows for consistent and reliable payouts to shareholders. It has increased dividends for 21 consecutive years, and at a payout of only 67 percent of free cash flow there is room for increases in the years to come.
Current yield: 3.5 percent
Nestle is another massive Swiss corporation, with a market cap of roughly $250 billion and operations across 190 countries. And like Novartis, it has a strong portfolio of products including its iconic chocolates line as well as Gerber baby foods, Stouffer’s and Lean Cuisine frozen foods and Purina pet products. Nestle’s stock is not listed on a major exchange like the NYSE or Nasdaq, but it trades a high volume of roughly 500,000 shares daily and you can purchase it easily via your brokerage or retirement account like most other stocks.
Turning to the energy sector, British oil major BP is a global player like domestic heavyweights. After the 2010 Deepwater Horizon rig disaster in the Gulf of Mexico, many U.S. investors are reluctant to view this U.K. corporation as a potential investment. However, after racking up roughly $65 billion in penalties, the negativity is priced in and likely fully realized. It’s now a megacap integrated oil stock trading at a price-sales ratio of less than 0.6. Compare that with Chevron Corp. (CVX) trading for roughly three times that valuation. With generous dividends and an attractive share price, BP is a bargain for income investors.
A twist on international energy stocks with big dividends is Britain’s National Grid, a utility that operates electricity and natural gas networks on both sides of the Atlantic. NGG is a rarity, with a $35 billion market capitalization and a global footprint that covers the Northeastern U.S. as well as England, Scotland and Wales. Shares have slumped in the last few years as expenses have ramped up, but investment in growth and the quality of its infrastructure will pay off in the long term — particularly for dividend investors who get in at these low prices and currently elevated yields.
Like electricity, a smartphone with a data plan or high-speed internet access for businesses are necessities. Headquartered in Spain, TEF provides data, voice and video services to 48 countries, including some of the fastest-growing regions of South America. It’s operations in Latin America account for almost half the company’s revenue — and thanks to a growing consumer class, that figure is sure to grow even more in the years to come. Reliable subscriptions are the same whether you’re talking about a mature domestic telecom like AT&T (T) or a more dynamic company like Telefonica. That helps support reliable dividends, too.
Asian telephone and internet giant China Mobile is a way to invest in a growing emerging market increasingly dependent on data. While growth has been brisk in the last decade, China Mobile also boasts an impressive scale unrivaled by even entrenched U.S. telecoms. CHL is the world’s largest mobile telecom at nearly 900 million current subscribers — almost three times the total population of the United States. China stocks have admittedly been in a tough spot in 2018 compared with past years of double-digit GDP growth. However, telecom is a low-risk business, and with a massive subscriber base CHL is set to weather the storm.
Established more than 130 years ago and boasting some of the biggest consumer brands like Dove soaps and Lipton teas, Unilever is a dividend stock that long-term investors can take to the bank. It’s unrivaled portfolio of staples products and geographically diverse operations make it a low-risk investment, and a recent buyout frenzy including 18 acquisitions since 2015 ensures that Uniliver’s future dominance is secure. While Unilever dividends can fluctuate quarter to quarter, it has hiked its payout from about $1.11 in 2010 to $1.56 in 2017 — an impressive increase of more than 40 percent in just seven years.