This New Year, income investors like me will likely be finding some of the richest dividend yields overseas. As a general rule of thumb, foreign stocks often have higher dividend payouts than their U.S. counterparts, and pay a much larger dividend as well. While lately there's been more emphasis on dividends in the United States, domestic stocks on the whole still offer some of the lowest yields in the world. At present, the Standard & Poor's 500 Index yields a paltry 1.8%. Yields on the MSCI EAFE Index, a widely followed measure of stocks in developed foreign markets, are far more attractive at 2.4%.
When foreign companies have extra cash, they are far more likely than U.S. firms to share the cash with investors as dividends. And most indicators suggest it will be foreign companies with much of the excess cash this year, since many overseas economies are predicted to grow faster than the United States. Experts forecast 3% growth for the U.S. economy in 2011, while growth is pegged at 6% for Latin America and 7% for parts of Asia. [See "The Most Undervalued 12% Yield on the Planet"]
To profit from growth rates twice those of the United States, income investors should be adding foreign dividend-paying stocks to their portfolios right now. Here is a list of foreign stocks that offer strongappreciation potential and hefty dividend yields... [For more, see our free course: "Guide to the World's Highest Yields"]
When foreign companies have extra cash, they are far more likely than U.S. firms to share the cash with investors as dividends. And most indicators suggest it will be foreign companies with much of the excess cash this year, since many overseas economies are predicted to grow faster than the United States. Experts forecast 3% growth for the U.S. economy in 2011, while growth is pegged at 6% for Latin America and 7% for parts of Asia. [See "The Most Undervalued 12% Yield on the Planet"]
To profit from growth rates twice those of the United States, income investors should be adding foreign dividend-paying stocks to their portfolios right now. Here is a list of foreign stocks that offer strongappreciation potential and hefty dividend yields... [For more, see our free course: "Guide to the World's Highest Yields"]
1. Cellcom Israel Ltd (CEL)
Yield: 11%
Cellcom Israel is a leading Israeli cellular service provider established in 1994, currently serving some 3.4 million subscribers. The company has been paying quarterly dividends since 2007. Last year, the company generated $1.8 billion of cash flow and paid out $639 million in dividends. Dividends have grown 39% in the past three years to an annualized rate of $3.58. Cellcom Israel continued to record robust growth in the September quarter of 2010. Operating income was up 14.1% year-over-year, and consensus analyst estimates target 9% annual growth during the next five years, providing ample cash flow for moredividend increases.
2. Just Energy Income Fund (Toronto: JE-UN.TO)
Yield: 9%
Toronto-based Just Energy markets natural gas to homes and businesses in the Canadian provinces of Quebec, Ontario, Manitoba, Alberta and British Columbia. The company also serves customers in Illinois, New York and Indiana. Since its initial public offering in 2001, Just Energy has increased its monthly payout 29 times. The company has historically grown its cash flow by about 10% a year. Last year, Just Energy produced $230 million in distributable cash flow and paid out $187 million in distributions.
Investors should note, however, that this income fund will convert to a corporation, but it intends to continue paying monthly dividends at a $1.24 annualized rate. The company's stock currently trades on the Toronto stock exchange, but it also plans to pursue a listing on a major U.S. exchange.
3. Deutsche Telecom AG (DTE, Financial)
Yield: 8%
Deutsche Telekom provides telecommunications services in Germany and internationally. Last year the company generated $20.8 billion in cash flow and paid $5.7 billion in dividends. Net profits rose 7.9% year-over-year in 2010's September quarter, and the company anticipates cash flow will rise to $26.3 billion this year. In the past five years, dividends have grown 5% to a current annualized rate of $0.78 per share. The shares trade on the Frankfurt stock exchange as DTE, and also as American Depository Receipts (ADRs) over-the-counter in the United States as under the symbol "DTEGY."
4. Westpac Banking Corporation (WBK, Financial)
Yield: 6.5%
Westpac is one of the largest banks serving Australia and New Zealand. This bank also ranks among the elite stocks that have paid dividends for more than 150 years. Westpac just reported an 84% rise in full year net profits. The company produced net income of $6.1 billion and paid $2.7 billion in dividends. Westpac pays quarterly dividends and hiked its dividend 20% last year to a $7.37 annualized rate pershare. The shares currently yield 6.5%. Analysts think Westpac can grow income 9% a year in the next five years, which suggests more dividend increases are likely.
5. Administradora de Fondos de Pensiones Provida S.A. (PVD, Financial)
Yield: 6%
AFP Provida administers private pension funds in the Republic of Chile and also owns interests in private pension fund administrators operating in Peru, Ecuador, Mexico and the Dominican Republic. In 2009, AFP Provida produced net income of $161 million and paid out $40 million in dividends. The company recently hiked its dividend 29% to a $5.53 annual rate per share. Earnings have grown 17% annually in the past five years. AFP Provida's shares were a stellar performer in 2010 -- up more than 83%, compared with a 12% gain for the S&P.
Action to take--> Aggressive investors should consider owning shares of Cellcom Israel. While Cellcom Israel has risk because of falling airtime prices and new tariffs, so far, the company has been able to boost profits through greater efficiency and new revenue sources. More conservative investors may prefer Westpac, which offers less yield, but a 150 year dividend track record, conservative payout and steady growth.
Lisa Springer
Yield: 11%
Cellcom Israel is a leading Israeli cellular service provider established in 1994, currently serving some 3.4 million subscribers. The company has been paying quarterly dividends since 2007. Last year, the company generated $1.8 billion of cash flow and paid out $639 million in dividends. Dividends have grown 39% in the past three years to an annualized rate of $3.58. Cellcom Israel continued to record robust growth in the September quarter of 2010. Operating income was up 14.1% year-over-year, and consensus analyst estimates target 9% annual growth during the next five years, providing ample cash flow for moredividend increases.
2. Just Energy Income Fund (Toronto: JE-UN.TO)
Yield: 9%
Toronto-based Just Energy markets natural gas to homes and businesses in the Canadian provinces of Quebec, Ontario, Manitoba, Alberta and British Columbia. The company also serves customers in Illinois, New York and Indiana. Since its initial public offering in 2001, Just Energy has increased its monthly payout 29 times. The company has historically grown its cash flow by about 10% a year. Last year, Just Energy produced $230 million in distributable cash flow and paid out $187 million in distributions.
Investors should note, however, that this income fund will convert to a corporation, but it intends to continue paying monthly dividends at a $1.24 annualized rate. The company's stock currently trades on the Toronto stock exchange, but it also plans to pursue a listing on a major U.S. exchange.
3. Deutsche Telecom AG (DTE, Financial)
Yield: 8%
Deutsche Telekom provides telecommunications services in Germany and internationally. Last year the company generated $20.8 billion in cash flow and paid $5.7 billion in dividends. Net profits rose 7.9% year-over-year in 2010's September quarter, and the company anticipates cash flow will rise to $26.3 billion this year. In the past five years, dividends have grown 5% to a current annualized rate of $0.78 per share. The shares trade on the Frankfurt stock exchange as DTE, and also as American Depository Receipts (ADRs) over-the-counter in the United States as under the symbol "DTEGY."
4. Westpac Banking Corporation (WBK, Financial)
Yield: 6.5%
Westpac is one of the largest banks serving Australia and New Zealand. This bank also ranks among the elite stocks that have paid dividends for more than 150 years. Westpac just reported an 84% rise in full year net profits. The company produced net income of $6.1 billion and paid $2.7 billion in dividends. Westpac pays quarterly dividends and hiked its dividend 20% last year to a $7.37 annualized rate pershare. The shares currently yield 6.5%. Analysts think Westpac can grow income 9% a year in the next five years, which suggests more dividend increases are likely.
5. Administradora de Fondos de Pensiones Provida S.A. (PVD, Financial)
Yield: 6%
AFP Provida administers private pension funds in the Republic of Chile and also owns interests in private pension fund administrators operating in Peru, Ecuador, Mexico and the Dominican Republic. In 2009, AFP Provida produced net income of $161 million and paid out $40 million in dividends. The company recently hiked its dividend 29% to a $5.53 annual rate per share. Earnings have grown 17% annually in the past five years. AFP Provida's shares were a stellar performer in 2010 -- up more than 83%, compared with a 12% gain for the S&P.
Action to take--> Aggressive investors should consider owning shares of Cellcom Israel. While Cellcom Israel has risk because of falling airtime prices and new tariffs, so far, the company has been able to boost profits through greater efficiency and new revenue sources. More conservative investors may prefer Westpac, which offers less yield, but a 150 year dividend track record, conservative payout and steady growth.
Lisa Springer
http://www.streetauthority.com
Lisa is a stock analyst with nearly 25 years of investment research experience. She earned a MBA in Finance from the University of Chicago in 1987... Read More.
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Lisa is a stock analyst with nearly 25 years of investment research experience. She earned a MBA in Finance from the University of Chicago in 1987... Read More.
Sponsored Link: The Most Important Day in America in 50 Years... It’s Coming in 2011. This day will change everything about our nation and your day-to-day life. Watch the eye-opening video presentation here...
Disclosure: Neither Lisa Springer nor StreetAuthority, LLC hold positions in any securities mentioned in this article
