Here's where the highest yields are hiding

If you aren't looking beyond US borders, then you're missing out on some of the world's most productive securities.

By StreetAuthority Jan 7, 2014 4:49PM
Image: Earth encircled by money (© Bob Jacobson/Corbis)By Michael Vodicka

I think it's one of the market's biggest missed opportunities. Every day, millions of U.S. investors are missing out on the world's highest-yielding securities.

That's because the vast majority of the world's highest-yields aren't found in the United States.

As the chief strategist of High-Yield International, my job is to scour the globe for the world's highest yielding stocks, funds and ETFs. And at last count, my research shows that over 79% of the world's highest-yielding stocks are based in international markets. (You can read more of my research about these stocks here.)

That includes companies like global shipping giant Navios Maritime Partners (NMM), which yields 9.3%. And Bermuda-based outfits like SeaDrill (SDRL), which pays an impressive 7.9%. If you're like most people, then you'll probably never take advantage of foreign stocks like these.

That's a shame, because the average stock in the United Kingdom yields 3.8%. Brazil's average yield is 4.4%, Australia yields 4.3% and New Zealand pays 4.5%.

By contrast, stocks here at home yield a paltry 2%, on average.

Most U.S. investors dismiss the idea of investing abroad. They tend to think other countries are "riskier" than the United States.

But that's not always the case, especially with one special country I'll tell you about in a moment, where average yields are double those found in the United States.

A safer way to invest
In the past couple of years, America's total debt load has topped $17 trillion -- and that burden is projected to grow even larger, reaching a total of $25 trillion by 2020.

Like a taxi meter spinning faster and faster, we are slipping $1.9 billion deeper into the hole every day -- at a rate of $80 million per hour.

Our credit rating was even knocked down from its golden "AAA" status by Standard & Poor's.

Now compare that to a country like Australia. From the mid 1990s through 2007, the Australian government steadily paid down its debts, reducing the nation's debt-to-GDP ratio to less than 10%.

Although Australia took steps to help stimulate its economy amid the financial crisis, the government kept spending under control. As a result, Australia's public debt-to-GDP ratio is still just 29% -- several times lower than the United States' debt ratio.

But what's more, amid all the pain caused by the Great Recession, Australia has truly lived up to its nickname the "Lucky Country," avoiding recession entirely and emerging from the global downturn largely unscathed.

Throughout the entire economic slowdown, Australia's GDP only experienced a single quarter of negative economic growth, and that was at the height of the financial crisis in 2009. The country's growth quickly re-accelerated to a 3% clip in 2010.

That's part of the reason Australia is one of only eight countries that still sports a perfect "AAA" credit rating by all the major ratings agencies.

Yields that are 2X higher than U.S. stocks
But Australia is much more than just a safe place for your money. The country also offers some of the highest yields on the planet.

The average dividend yield of all stocks on the Australian Stock Exchange stands at 4.3%, more than double the 2% average yield offered by stocks in the S&P 500.

Take Telstra (TLSYY), Australia's equivalent to AT&T (T). The telecom offers phone and Internet service around the country.

You'd expect a telecom to pay a substantial dividend. AT&T pays a yield of 5.2%, making it one of the S&P's highest-yielding stocks.

But Telstra pays a yield of roughly 5.8%.

It's the same story with APA Group (APAJF). This company is the largest natural gas infrastructure firm in Australia, owning more than 10,000 kilometers of natural gas pipelines, two major natural gas storage facilities and two power plants.

If that business sounds familiar, it's basically the same as a master-limited partnership (MLP) here in the United States. MLPs are known for their high-yields. The largest U.S.-based MLP, Enterprise Products Partners (EPD), yields 4.2%.

APA Group? It pays more than 6.6%, working in basically the same business.

But Australia is by no means the only country that offers fat dividend yields like these. The fact of the matter is there is simply a much stronger dividend culture abroad. Individual investors play a larger role in those markets, and they have always demanded more dividends.

Don't get me wrong, I don't recommend putting your entire portfolio into international high-yielders. But I think most U.S. investors are unaware of what they're missing. Put simply, if you want to earn the most income possible, then you have to start considering international income stocks.

Michael Vodicka does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC owns shares of EPD, T, NMM, SDRL in one or more of its "real money" portfolios.

More from StreetAuthority

21Comments
Jan 7, 2014 8:28PM
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These recommendation(s) track closely with the greatest success I have had over the past 5 years.  Germany and Ireland both took a conservative approach and have recovered most rapidly.
Jan 8, 2014 12:12PM
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Not much economic news ... so I cycled back to this site.   I have noticed that msn regularly censors conservative comments but leaves all anti-Republican comments on their sites.  Hard to get the facts out when you don't get the other side (correct) information.  I've eliminated the far left bias on NYT, Washington post, NBC, CNN et al.  I guess that is why FOX is scooping up the ratings.  People REALLY want unbiased news.
Jan 8, 2014 11:42AM
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I can't even get past the first recommendation ... great yield yes ... if it even pays again next quarter ... it shows a dividend payout of $1.77 on earnings of $1.40 ... I'm no mathematician but seems to me a bad idea to pay out more than you make ...
I bought one of these "great MSN yield recommendations" last year without thinking it through. Cliff's Natural Resources (CLF) by the next x date, it had cut the dividend about 70% and the stock dropped about the same. I received no incredible payout and lost a huge amount of principal. No one to blame but myself -- if it seems to good to be true -- it is. 
Jan 7, 2014 11:22PM
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But the Aussie dollar is down 15% the past 6 mos or so, and so, therefore, are the dollar values of the stocks and dividends.  Similar, but less extreme, with Canada (many of whose stocks, etc, have NYSE or OTC listings and pay dividends in US dollars).
Jan 8, 2014 12:34PM
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The Fed is giving the banks money at.025% every day. Now who is going to pay for this bull?
Jan 7, 2014 11:55PM
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You mean that you aren't investing all of your Obama dollars back into Obamaville?

Jan 8, 2014 12:26PM
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IQ-68.....You really don't read well or comprehend do you ??

Or is it just the articles that fit your agenda or rants..?


Seems to me there is "more overall" Obama bashing on this Site then anywhere else I go for news.

Try reading "all the comments", then maybe ye shall have an awakening.

FOX,....Seriously..?? LMAO.

Jan 8, 2014 12:33AM
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I always get skeptical, of anything Headquartered in the Caribbean .

A couple of times, was enough for us.

Jan 8, 2014 11:34AM
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I find Foreign stocks take a big  lump of the dividend. Canada for example and the others; also, add the fact that  the stocks are not usually as safe as ours. I gave up on them.   BRL  NH   USA
Jan 8, 2014 11:58AM
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Owned SDRL for a couple of years now. It recently took a 20% hit, which most analysts think is a good buying opportunity.
Jan 8, 2014 12:50PM
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I had SeaDrill (SDRL) on a Watchlist for over a year, finally lost interest.
Jan 8, 2014 10:30AM
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Repukelicans have the highest yielding imbeciles known to man!
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