2 Top Global Dividend Stocks with Growth Potential
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While Americans claim to want to travel, their portfolios remain decidedly domestic. This issue of asset allocation has over-exposed most investors to the same American currency that their wages, homes, bank accounts and living expenses are exposed to. One strategy that can help diversify one's risk and increase portfolio growth is to own foreign dividend stocks.
As with any dividend strategy, a total return approach is well advised. With that in mind, here are three dividend paying internationally based companies that also have long-term growth potential.
Playing into a theme of growing global scarcity is BHP Billiton (NYSE: BHP), which is yielding about 3%. Billiton, based in Australia, is a leading resources company deriving income globally. They have mining interests in copper, iron ore, bauxite, silver, lead, zinc, molybdenum, uranium, gold, diamonds, and titanium making the world's largest mining conglomerate. They are also involved in potash development, metallurgical coal and thermal coal mining. The company develops and exploits significant oil and gas deposits in a dozen countries, including in the United States in the Gulf of Mexico and Arkansas.
BHP Billiton's balance sheet has benefited from close proximity of many of its assets to China. By the numbers, the company sports return on assets over 20%, return on equity over 35%, free cash flow to market cap of 9% and has a sustainable growth rate exceeding 20%. Much of Billiton's profits have been plowed into developing further resource plays that over time will benefit from the global population's desire to have a higher standard of living.
BHP Billiton uses a unique share structure as a dual listed company, also trading under the symbol (NYSE: BBL). Either share class confers the same rights so using the one with the higher dividend can be advisable.
Also playing on the theme of an emerging global population, in addition to aging populations in developed nations, is AstraZeneca (NYSE: AZN), which pays over a 6% dividend from recent prices. By size, AstraZeneca ranks as the world's seventh largest pharmaceutical company and has a high growth rate in emerging countries. The company has benefited from acquisitions and a consistently exceptional product portfolio.
AstraZeneca is based in the U.K. and also derives income globally. Like many pharmaceutical companies, it has recently faced some headwinds due to patent expirations and slow product launches, but its proactive commitment to biotechnology gives it a deep pipeline. Its finances are strong with 14% return on assets, over 40% return on equity, free market cap over 11% and a sustainable growth rate over 20%.
Both of the companies profiled are similar fits to the dividend income strategy that many Americans follow with such holdings as Freeport McMoRan (NYSE: FCX) and Pfizer (NYSE: PFE), although with a slightly more diversified currency exposure and different growth profiles. It may pay for Americans to look a little further from home in building their portfolios.
Disclosure: Kirk and clients of Bluemound do not own shares of any company mentioned. Neither Kirk nor Bluemound clients plan any transactions in the next 3 trading days in the mentioned company's securities. Opinions subject to change at any time without notice. Follow Kirk on Twitter @GALPinvesting or see his watch lists at www.GalpInvesting.com