Reduce your geographic risk with international dividend stocks.
When it comes to dividend stocks, many investors are inclined to look beyond the typical blue-chip stocks that are out there in order to tap into bigger yield. After all, right now, the S&P 500 index of the top U.S. corporations yields an average of just 1.37% while the Dow Jones Industrial Average yields just 1.87%. Yes, one way to find higher yield is to look at specific domestic sectors or smaller, lesser-known stocks — but another way to tap into bigger yield is to look overseas. Not only do some of these international picks yield much more, they also add a nice layer of diversification to your portfolio beyond the typical U.S. blue chips income investors may be used to.
Canadian Natural Resources (ticker: CNQ)
Unlike some other international stocks, Canadian Natural Resources pays a fairly steady dividend on a steady cycle. Specifically, it has consistently offered quarterly distributions since 2019 ranging between about 28 and 38 cents a share. More importantly, those dividends have largely increased each successive quarter over the last two years. CNQ is primarily an energy company operating in Canada’s “oil sands,” some of the harder-to-access fields consisting of oil mixed with sandstone, water or clay. This kind of energy source is pricey to pull out of the ground, making it difficult to turn a profit when oil is cheap. With crude oil prices now more than $70 per barrel and many analysts projecting continued inflation in energy prices in the near term, CNQ’s dividend isn’t just safe but likely to march even higher.
Dividend yield: 4.03%
CI Financial Corp. (CIXX)
Toronto-based CI Financial Corp. is one of the largest asset management companies in Canada, offering mutual funds and investing services to institutions as well as hedge funds and alternative investments for high-net-worth clients. Canada’s economy has been booming over the last year or so in part because it weathered the pandemic a bit better than the U.S. but also because the specter of global inflation is particularly good for Canada’s resource-rich economy that deals in metals, timber and energy products. Just this year, CIXX stock has surged 50%, thanks to this trend.
Dividend yield: 3.35%
KT Corp. (KT)
KT is a roughly $7 billion Korean telecom that offers wireless communications, broadband internet and satellite broadcasting services to Southeast Asia. As of last year, KT served more than 22 million mobile subscribers and about 9 million “IPTV” subscribers to its cable-like offerings and media platforms. Granted, that makes this firm a lot smaller than the big U.S. telecoms, but KT also lacks the competition faced by domestic stocks and remains the dominant force in South Korea. This entrenched subscriber base provides steady income to power a juicy dividend yield.
Dividend yield: 4.16%
Pembina Pipeline Corp. (PBA)
Canada’s Pembina Pipeline offers “midstream” transportation and storage services to the energy industry across North America. Specifically, it has pipelines with capacity of 3.1 millions of barrels of oil equivalent per day and ground storage of 11 millions of barrels. And that’s just crude — Pembina also has about 21 million barrels of cavern storage for natural gas. That also comes alongside railway operations, “fractionation” and other related services. While some of the materials stocks on this list are looking good right now because of rising commodity prices, Pembina stands apart because it’s more stable than some other materials companies, as it simply stores and transports fossil fuels. This insulates it a bit from volatility in oil and gas markets and allows for more reliable operations — and more reliable dividends as a result.
Dividend yield: 6.19%
PetroChina Co. (PTR)
PetroChina is one of several international energy companies that are booming right now, thanks to higher oil and gas prices compared with a year ago. The integrated petrochemical and oil exploration company is the public arm of the state-owned China National Petroleum Corporation. Investors who are concerned about putting their money in companies they believe in may want to think twice about the close ties to China’s government. However, investors primarily concerned with stability and dividends should see the endorsement of Beijing as a big safeguard against any potential volatility or dividend decreases down the road.
Dividend yield: 5.65%
Vale S.A. (VALE)
Some investors may be turned off by the fact that Brazilian mining powerhouse Vale tends to only pay a dividend once a year — and unfortunately, with a payday in March, you might be waiting a while until the next distribution. However, not only does that 77 cent payday add up to a great yield at current prices, this $110 billion materials stock has deep pockets and diversified operations to ensure that dividend won’t be its last. Vale produces everything from iron ore and nickel to precious metals and coal. And considering that rising materials prices and inflationary pressures are boosting its business across the board, it should be no surprise that VALE has reaped big rewards for investors over the last 12 months with gains of more than 100%.
Dividend yield: 3.55%
India’s Vedanta is a diversified natural resources company with operations spanning oil and gas, metals such as silver and copper, and both thermal coal for power plants and metallurgical coal to turn iron ore into steel. The company also operates power generation facilities, giving it a tremendously broad and diversified business model. The COVID-19 pandemic is certainly affecting India harder than other parts of world right now. That said, Vedanta supplies important materials to the recovering economies of the West as well as “staples” for the domestic Indian economy. That adds up to reliable revenue, which has fueled 72 cents in dividends over roughly the last 12 months — good for a yield of more than three times that of the S&P 500.
Dividend yield: 4.8%
Seven international dividend stocks for diversification:
— Canadian Natural Resources (CNQ)
— CI Financial Corp. (CIXX)
— KT Corp. (KT)
— Pembina Pipeline Corp. (PBA)
— PetroChina Co. (PTR)
— Vale S.A. (VALE)
— Vedanta (VEDL)
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7 International Dividend Stocks for Diversification originally appeared on usnews.com
Update 06/17/21: This story was published at an earlier date and has been updated with new information.