Markets

Your Passport to Underappreciated 7% Yields

By Brett Owens

Subscribers to my Contrarian Income Report have enjoyed safe yields of 7% or more over time aEUR" and enjoyed long-term price stability aEUR" thanks to two simple principles:

  1. Buy stocks and funds when theyaEURtmre out of favor. That way, prices are lower and yields are higher when we make our purchase.
  2. Rely on dividends alone for income. That way, ups and downs in the stock price wonaEURtmt cripple their usefulness to a retirement portfolio. In fact, we use them in our favor.

2018 hasnaEURtmt exactly been up to snuff. Most market experts expected the Trump tax cuts, breakneck economic growth and fat corporate earnings to shoot the market to the moon. Instead, weaEURtmve only managed to advance less than 5% more than halfway throughout the year.

Yet stocks still are grossly overpriced aEUR" the byproduct of this practically ancient nine-year bull market. Finding quality 7%-plus yields in the American markets is difficult enough, but finding them at a decent price?

Good luck.

My advice? DonaEURtmt beat your head against the wall aEUR" think around it. In this case, if AmericaaEURtms high yielders are bloated, look outside the U.S.

HereaEURtms a poorly guarded secret that many investors still arenaEURtmt wise to:

International blue chips often yield just as much if not more than their American counterparts. And because information on these companies isnaEURtmt as easy to come by as U.S. blue chips, they can go under the radar and be undervalued as a result.

Better still: Trade-war rhetoric has been holding back many international stocks as well, providing even juicier buy points and inflating yields.

ThataEURtms a perfect scenario for shrewd opportunists like you and me.

LetaEURtms dig in. Here are five international stocks yielding between 6% and 8%:

China Petroleum & Chemical Corporation ( SNP )

Country: China

Dividend Yield: 7.3%

China Petroleum & Chemical Corporation ( SNP ) , more simply known as Sinopec, is ChinaaEURtms largest energy company at more than $110 billion aEUR" larger than AmericaaEURtms ConocoPhillips ( COP ) , for context. This is a fully integrated petroleum and natural gas company that also deals in oil refining, petrochemical products, chemicals, electrical and mechanical equipment, gas stations, even production of steam.

And this energy titan is putting together a gangbuster 2018 that has it up 18% versus a 7% loss for the iShares MSCI China ETF ( MCHI ) .

The company in April delivered its best quarterly earnings report in nearly three years. Profits jumped 12% to 19.31 billion yuan ($2.87 billion), on revenues of 621.3 billion yuan ($92.2 billion), up 6.7% year-over-year. Much of that profit was built on the back of higher processing margins aEUR" something that has lifted several of ChinaaEURtms energy firms.

And a month earlier, the company proposed a record 0.5 yuan (7.4-cent) dividend for 2017. That would be its largest dole since going public in 2000.

The company clearly is making shareholder rewards a priority. That, its energy dominance, and its new investment project in industries including new energy, energy conservation and environmental protection, makes SNP one of the better blue-chip plays in this sector.

Sinopec Is Building a Head of Steam

Chile 6.6%

Enel Generacion Chile S.A. ( EOCC )

Country: Chile

Dividend Yield: 6.6%

Enel Generacion Chile S.A. ( EOCC ) gives you almost exactly what you would expect from a utility company in an emerging market: high yield, but a lot more instability than youaEURtmd get from an American utility. To wit: EOCC shares have lost more than a quarter of their value in 2018 aEUR

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

MCHI WBK COP SNP

Other Topics

Options