Why Investors Should Consider These Fantastic English Stocks
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Diversification is a subject most investors understand well. As the theory goes, it’s important to spread your bets so as to not become too heavily concentrated in one stock or industry. A critical piece of risk management is to not just try to maximize reward, but also minimize loss potential.
While most investors are likely diversified across asset classes, within their equity portfolios, they may not be diversified geographically. Picking companies from outside the United States is a great way to further diversify your stock investments. The following are some highly profitable companies that are headquartered in London that can provide a big boost to any portfolio.
Three great English companies
Within the consumer staples sector, investors have certainly come across the familiar American giants. Right alongside those industry stalwarts is Unilever plc (NYSE: UL). What may be an unfamiliar name is actually a company with a slew of extremely familiar household brands.
Unilever has a long history stretching back more than a century, and a stable of popular brands including Dove, Vaseline, Bertolli, and Lipton. The company has a long operating history of more than 100 years, and along the way has amassed a market value nearing $120 billion.
Unilever recently delivered outstanding first-quarter results, particularly for a consumer staples company. Unilever generated nearly 5% underlying sales growth through the first three months on the strength of a 2.2% rise in volumes year over year. Pronounced strength was seen in the company’s hugely successful international segments. The company’s sales in emerging markets increased 10.4% through the first three months, as opposed to the same quarter one year ago.
In the wake of its first-quarter report, Unilever increased its dividend by 10% in euros per share. At recent prices, the stock yields 3.3% annualized.
Health care behemoth GlaxoSmithKline (NYSE: GSK) is a great choice for investors interested in big pharma. Glaxo holds a $125 billion market value and its business is organized into Pharmaceuticals, Vaccines, and Consumer Health Care.
The past few years have been difficult for many pharmaceuticals, as the industry has grappled with slow global economic growth and patent expirations. Those problems are only exacerbated for companies operating in Europe, where the economic conditions remain challenged at best.
That’s why Glaxo’s most recent annual results, while unimpressive on the surface, show the true resilience of the company. The company saw revenue dip by 1% in the most recent fiscal year, significantly better performance than many of its U.S.-based peers that are struggling with steep patent cliffs. Even better, Glaxo’s dividends rose last year, and the stock now yields more than 4.5% at recent prices.
Telecommunications juggernaut Vodafone (NASDAQ: VOD) may be an unfamiliar name to investors in the United States, but America accounts for a major component of Vodafone’s business. Vodafone owns a 45% stake in Verizon Wireless and receives hefty financial proceeds from this stake.
Verizon Wireless is the number one carrier in the United States by subscribers, so needless to say, Vodafone’s stake is extremely valuable. According to the Wall Street Journal, Verizon Wireless is valued at $248 billion, meaning Vodafone’s interest is currently worth about $112 billion.
As a result, Vodafone has traditionally taken this cash and used it to fund dividends to its own shareholders. Recently, Vodafone announced a share buyback as well. According to Yahoo! Finance, Vodafone’s semi-annual dividend yields nearly 5.5%.
Find profits from across the pond
Don’t be put off by the fact that these companies are located within the shaky European economy. Each of these companies has a global footprint and the profits to calm any fears.
Not only are these stocks wildly successful, but they aren’t stingy about sharing their success with shareholders.
When most investors think of the consumer staples, health care, or telecommunications industries, many likely automatically default to the familiar U.S.-based giants. However, investors with an eye for massively profitable companies who’d also like to diversify their holdings would be wise to not forget about these great businesses.
Each of these stocks collects profits from all across the world but happen to be based in England. Although your investing search may currently be concentrated in the S&P 500 as opposed to the FTSE 100, you’d do yourself a service by adding these high-yielding, hugely profitable stocks to your watch lists.
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Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Unilever and Vodafone. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!