5/24/2012 6:45 PM ET|
10 fat-dividend stocks for lean times
As global economies struggle, income-producing investments will be lifted by short supply and heavy demand. In that environment, these stocks are likely to pay off.
I'm certain that 10 years from now, on the other side of the current eurozone debt crisis, higher demand and global scarcity will lead to higher prices for a wide range of commodities, such as corn and copper. If you've got a long-term perspective and can stand the current pain, I think betting on that long-term trend makes sense.
But it doesn't make as much sense as betting on the long-term scarcity of income-producing assets with solid credit ratings. (And for this column, I'm thinking of dividend stocks.)
I'm absolutely certain that those will be in higher demand in that time frame and that they will be in even shorter supply than corn or copper. And, unlike many commodity plays, these income vehicles pay, well, income. Now.
Look at the trends.
The number of AAA-rated bond issuers in the world continues to shrink -- even the number of AA-rated issuers is falling. On Tuesday, Fitch Ratings downgraded Japan two notches to A+. And how long do you think the U.S. AA debt rating is going to last?
Prices of bonds will fall with declining ratings -- which will send yields upward -- after delivering big losses to bondholders. And that's not the only danger. The currencies of deeply indebted countries will depreciate at the same time. You might get paid more dollars, yen or euros, but they'll be worth less.
And finally, as the world ages, pension funds, insurance companies and the other institutions that are on the hook to deliver retirement payouts will have an increasing appetite for exactly the kind of income-producing assets that are in short, short supply: highly-rated, high-yielding, stable-currency bonds and dividend stocks.
Know where I'd like to put some of my money to profit from the thirst for income? In the high-dividend stocks of highly rated companies that do business in the world's strongest currencies.
And just in case you agree, I've put together a 10-name portfolio of exactly that kind of stock.
The best deal for your dollar
Why start any kind of a portfolio, even a dividend portfolio, in this scary market? Because when stock prices are depressed, you can buy the most dividend for your investing buck.
And the dividend bargains are even more attractive when you consider that many of the world's strongest currencies are either in countries near the eurozone -- where stocks have taken a pounding in the eurozone debt crisis -- or in commodity economies where stocks have been hit hard by the strength of the U.S. dollar and fears of a slowdown in China's economy.
So what are likely to be the world's strongest currencies in the long run? First, I'd look to countries that run their government budgets and their financial systems very conservatively. That means Norway, Sweden, Singapore and Chile.
Second, I'd look to countries with commodity dominated economies that have a record of coping reasonably well with the wild swings typical of a commodity economy. I'd include Canada and Australia in that group.
Third, I'd be willing to risk a position or two on stocks in countries where the trend in the credit rating is upward and where the fiscal policies of the government show encouraging discipline. Those would include Colombia, Peru and Indonesia. (But be aware that the risk of these countries going off the track is higher; the history we can look at is relatively short.)
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I searched high and low for some answers and I now follow the strategy of selling puts to get into stocks at a discount and then I sell covered calls to get assigned and out. I read about on a site at www.fullyinformed.com and went through all his put strategies at http://www.fullyinformed.com/put-selling-index/ and I have for the first time made really good money and it cost me nothing but my time to read all the articles. The person behind that site has my thanks. There is no charge and I learned plenty about how to invest for the long haul and the horrible markets we have been in.
I now hold Johnson and Johnson, Clorox, Exxon, Microsoft, Kraft, Pepsico and KO thanks to what I learned and I am up 25% in real money over the course of two years. So I say no thank you to facebook, bradken, and chile banks and singapore. I would rather hold big blue chip companies that I can understand and are here in America but trade around the world. Buy American.
Before investing in a foreign stock research the tax rates. Example Australia has 30% tax rate on foreign investors. This then reduces the above reported 9.42% to roughly 6.5% or the .2095 cents that is paid SEMI annually to .1466 cents. which translates to Bradken's annual yield (current price is 6.05) to 4.8%. Seekingalpha dot com forward slash article forward slash 24809-witholding-tax-rates-by-country-for-foreign-stock-dividends give a pretty comprehensive list of foreign taxes charged to US investors. Not all the sparkles yellow is gold. Hope this helps.
SDRL is Bermuda based, and I don't get taxed at all on my shares. I bought more at $38,$36, and probably more at $34, if it falls that much. I got in at $26-$32, so ahead of the game and love those divys. SDRL just increased their divy from .80 to .82 cents, and also a one time .15 cent extra dividend for this quarter. So, this quarter was .97 cents a share divy. granted the stock has slumped, but,just about everything else has to.
A couple of these maybe even a few are fine or at least reasonable......
But I kinda think we can locate/find just as many good companies that are Domestic...
That are International or Global players....With pretty much as good of a dividend averages...
Foreign investing just isn't always as good as it seems.
vitually all the stocks mentioned have tanked in the last few days wiping out whatever dividend
you thought might be available...these stocks are bad values and will be the first to plummet
in a global meltdown....which we are now seeing...the retail investor is at a complete disadvantage
and will get hammered time and time again....keep your money in an fdic account and wait
Ironic how many of these stock picks are outside of the U.S. of A. What's Jimmy Boy up to? How much did he lose on Facebook? When a big colored guy tells you he has a pretty girl who wants to meet you, that big colored guy is called a PIMP.
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