With interest rates near zero and traditional incomeinvestments
like savings accounts and certificates of deposit earning next to
nothing, dividend-payingblue chips have become wildly popular
lately... especially in high-yield sectors such as
For example, in the past 12 months both
have returned 19% -- handily outperforming the S&P's 10% return
during the same period.
That makes sense. Telecom is considered a "recession-proof"
industry. Regardless of what's happening with theeconomy , people
will still pay for cell phone and Internet access. And with Verizon
and AT&T each yielding around 5%, both companies look like a
good choice for income investors in search of high yields.
But while a 5%dividend yield might sound like a lot when you
compare it to the paltry 2.1% paid by the rest of the S&P, it's
by no means the best you can find in this industry.
In a recent issue ofyield , and better yet... it has a lot more
room for growth.
Chances are you've never considered this company. In fact, I
doubt you've ever heard of it.
That's because the company --
Telefonica Brazil (
-- isn't based in the United States. Instead, with over 11 million
fixed-line clients, 3.5 million broadband users, and 680,000 pay-TV
subscribers, Telefonica Brazil is one of the largest
telecommunication companies in Brazil.
And not only does this company dominate both the fixed-line and
broadband business, but with its recentacquisition of Vivo
Wireless, Telefonica is now also the largest wireless operator in
Brazil as well.
Now, it's true that VIV'sshares have sold off, thanks in part to
recent weakness in the Brazilianmarket . Paul sees that as an
opportunity. [Editor's note: Telefonica Brazil makes two annual
"return of capital " payments, and most stock screeners don't take
that into consideration when they report the stock's yield. As a
result, most financial websites like Yahoo! Finance and Marketwatch
incorrectly report its yield.]
Unfortunately, most investors will never consider a stock like
Telefonica Brazil at any price (or dividend yield)... or any other
international stock for that matter, even though they can often be
bought right here on the New York Stock Exchange. Some investors
think they're too risky.
That's a huge mistake.
Just because a company is located outside the United
States, doesn'tmean it's risky.
In fact, investing in some foreign countries can actually be
safer than investing here at home.
But don't just take my word for it, here's what
Paul Tracy has to say about the matter:
"Let's face it, the past 12 years haven't been kind to American
equities. In the dozen years ended September 30, 2012, the S&P
500 returned just 20%, including dividends. That's equivalent to a
pathetic 2% annualized return -- not even enough to keep pace
"Meanwhile, problems in Washington are only making matters
worse. A ballooning national debt, the "fiscal cliff," and billions
of dollars in additional monetary stimulus have plagued the U.S.
over the past few years.
"That's one reason Standard & Poor's decided to cut the
United States' coveted "AAA"credit rating last August. After
thedowngrade , the U.S. now sports a credit rating of "AA+," the
same rating as France and Austria.
"But while the U.S. government has struggled to rein in the
out-of-controldeficit spending that led to the downgrade, 13 other
large countries across the globe have managed to keep their "AAA"
"Of course, credit ratings aren't everything. And two of the
ratings agencies, Fitch and Moody's, still designate the U.S. as an
"AAA"-rated country. But it just goes to show there are plenty of
other countries out there that are doing something right."
Investors seem to reward that sort of fiscal responsibility too.
Just look at what one of those 13 large "AAA"-rated countries --
Canada -- has been able to do over the last 12 years:
Since the beginning of the new millennium, Canadian stocks -- as
measured by the Toronto Stock ExchangeIndex -- have returned over
180%... outperforming their American counterparts by over 160
And Canada isn't the only "AAA" country that's done well in the
last twelve years... Australia has returned 44%... Hong Kong 99%...
and Denmark a staggering 205%.
But it's not just the performance that makes investing
internationally so attractive. As it turns out, many of the
companies in most of these countries pay a lot higher dividend
For example, the average yield for Canadian stocks is 3.0%. For
Hong Kong it's 3.3%, and for Australia it's as high as
These are the kinds of opportunities that investors are seeing
overseas. As you can see, I'm not talking about investing in
Chinese start-ups. I'm talking about investing in reliable
companies that are operating businesses in dependable
Don't get me wrong, neither I, nor Paul, would suggest you dump
everything you own and invest it in international stocks. The size
and scope of the U.S. market still make it a great place look for
But it just goes to show that when it comes to dividends, the
United States is by no means king. There are dozens of other
countries in which companies are paying stable dividend yields...
handing investors steady growth... and they're just as safe -- if
not safer -- as what you'll find in the United States.
Action to Take -->
Truth be told, there is a lot more to tell about investing in
internationaldividend payers. For example, did you realize that
there are 22 U.S. common stocks yielding 12%-plus (
see the full list of all 22 here
), but 133 such stocks abroad?
Paul has more on the yield discrepancy between U.S. and foreign
stocks -- including several more high-yield examples with names and
ticker symbols -- in this presentation.
Click here to read it now