In this article, we will discuss 10 best foreign stocks with dividends. You can skip our detailed discussion on foreign investments, and go directly to read 5 Best Foreign Stocks With Dividends.
A Wall Street Journal report published earlier this year cited data from the United Nations and mentioned that foreign investments saw a 77% year-over-year growth in 2021 to $1.65 trillion. The report also highlighted that foreign direct investments (FDI) also reached their pre-pandemic levels, amounting to $1.5 trillion.
Bill Bower, a manager of Fidelity Diversified International Fund, thinks that developing markets (DMs) offer great exposure to high-quality companies, which are also traded at lower prices when compared with the US. He further said that investors should focus on these exceptional companies irrespective of their location. A Fidelity report also mentioned that adjusted P/E ratios of non-US stocks were lower than those of the S&P 500 in the second half of 2022, which means that foreign stocks are good value for money and can also offer attractive returns.
As 40-year high inflation has taken a toll on global stock markets, analysts recommend investing in dividend companies as they endure periods of stagflation better than their peers. According to a report by JPMorgan, high-quality dividend companies with long tracks of dividend growth resist cutting their dividends in recognition of slow earnings. In this case, these companies are expected to report higher payout ratios during recessionary periods. However, payout ratios this year are currently at low levels as dividends have just recovered from the pandemic of 2020. Some notable dividend stocks that investors are paying attention to include American Express Company (NYSE:AXP), The Procter & Gamble Company (NYSE:PG), and Bank of America Corporation (NYSE:BAC). In this article however our focus we be dividend-paying companies headquarter outside of the US.
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Our Methodology:
For this list, we selected companies that are based outside of the US but are traded on US stock exchanges. These companies pay steady dividends to shareholders. In addition to this, they have sound financial health and a strong cash position, which is rewarding for investors in the ongoing market conditions. The stocks are ranked according to their dividend yields, as of October 25.
Best Foreign Stocks With Dividends
10. ASML Holding N.V. (NASDAQ:ASML)
Dividend Yield as of October 25: 1.40%
ASML Holding N.V. (NASDAQ:ASML) is a Netherland-based multinational semiconductor company that specializes in chip-making equipment. The company has shown strong results in the third quarter of 2022. It posted €8.9 billion in net bookings and generated €5.8 billion in revenues. The company also repurchased €1 billion worth of its common shares during the quarter.
Though ASML Holding N.V. (NASDAQ:ASML) does not hold any dividend growth track record, the company has been paying regular dividends to shareholders since 2013. It currently pays a quarterly dividend of €1.37 per share for a dividend yield of 1.40%, as of October 25.
In October, JPMorgan maintained an Overweight rating on ASML Holding N.V. (NASDAQ:ASML) with a €690 price target, highlighting the company’s recent quarterly earnings.
As of the close of Q2 2022, 47 hedge funds tracked by Insider Monkey owned stakes in ASML Holding N.V. (NASDAQ:ASML), up from 46 a quarter earlier. These stakes have a total value of over $3.6 billion. With roughly 4.6 million shares, Fisher Asset Management was the company’s leading stakeholder in Q2.
In addition to American Express Company (NYSE:AXP), The Procter & Gamble Company (NYSE:PG), and Bank of America Corporation (NYSE:BAC), ASML Holding N.V. (NASDAQ:ASML) is also gaining investors’ attention in 2022.
Baron Funds mentioned ASML Holding N.V. (NASDAQ:ASML) in its Q2 2022 investor letter. Here is what the firm has to say:
“ASML Holding N.V. designs and manufactures semiconductor production equipment. It specializes in photolithography equipment, where light sources are used to photo-reactively create patterns on wafers that become printed circuits. ASML is the dominant leader across all types of lithography but, most importantly, is the only company selling equipment for extreme ultra-violet (EUV) lithography, the latest generation technology.
Indeed, because of the stalling out of Moore’s Law, advanced lithography of larger and multi-patterned silicon chips has been critical for leading-edge chip manufacturing and continued improvement in semiconductor chip performance over time. The company is well positioned to continue growing above industry rates as it rapidly adds capacity across its entire business to meet rising industry demand, especially from leading-edge customers continuing to invest to stay ahead of their competitors and drive chip performance forward.
Additionally, the introduction of high-NA EUV technology in the middle of the decade will add another leg to the growth opportunity.”
9. Linde plc (NYSE:LIN)
Dividend Yield as of October 25: 1.68%
Linde plc (NYSE:LIN) is a global multinational chemical company, based in Dublin, Ireland. It is one of the world’s largest industrial gas companies by market share.
Linde plc (NYSE:LIN) reported an operating cash flow of $2.2 billion in Q2 2022, which showed a 17% growth from the same period last year. The company returned $2.1 billion to shareholders through dividends and share repurchases during the quarter. Moreover, its adjusted operating profit came in at $2 billion, up 8% from the prior-year quarter.
Linde plc (NYSE:LIN) is one of the best foreign stocks on our list as the company has raised its dividends consistently for the past 28 years. It currently pays a quarterly dividend of $1.17 per share and has a dividend yield of 1.68%, as of October 25.
Seaport Global upgraded Linde plc (NYSE:LIN) to Buy with a $330 price target this October. The firm expects the company to outperform in the next quarter considering the demand for its products.
At the end of Q2 2022, 48 hedge funds tracked by Insider Monkey owned stakes in Linde plc (NYSE:LIN), compared with 54 in the previous quarter. These stakes have a total value of over $3.25 billion.
ClearBridge Investments mentioned Linde plc (NYSE:LIN) in its Q2 2022 investor letter. Here is what the firm has to say:
“The replacement of demand for Russian gas with green hydrogen positions Linde (NYSE:LIN) well. Green hydrogen, made by using renewable energy to split water into its basic elements, hydrogen and oxygen, and subsequently cleanly burn the hydrogen as fuel, is seen as key to lowering emissions in hard-to-decarbonize industries such as steel and cement, as well as transport. In 2021 Linde announced a long-term agreement to provide European semiconductor maker Infineon (OTCQX:IFNNY) with onsite production and storage of green hydrogen for the company’s site in Villach, Austria. Securing a clean, domestic source of energy for semiconductor manufacturing appears strategic today amid heightened concerns of reliable supply from Taiwan.”
8. Shell plc (NYSE:SHEL)
Dividend Yield as of October 25: 3.70%
Shell plc (NYSE:SHEL) is a London-based multinational oil and gas company that also specializes in petrochemicals. The company recently announced its 9.375% stake in QatarEnergy’s 16 million metric tons/year North Field South liquefied natural gas project. The production of this project will begin in 2026.
In the second quarter of 2022, Shell plc (NYSE:SHEL) announced $6 billion worth of shares buyback, which will be completed by the third quarter. The company has a strong cash flow generation, having $12.4 billion in free cash flow, up from $9.7 billion during the same period last year. Its dividends are safe within its cash flow as it targets 20% to 30% of its operating cash flow to be paid to shareholders.
Shell plc (NYSE:SHEL) currently pays a quarterly dividend of $0.50 per share. The company raised its dividends four times after the pandemic, coming through as one of the best foreign stocks. As of October 25, the stock has a dividend yield of 3.70%.
Piper Sandler raised its price target on Shell plc (NYSE:SHEL) to $80 in September with an Overweight rating on the shares. The firm remained bullish on integrated oils and appreciated the company’s strategic properties.
At the end of June 2022, 39 hedge funds in Insider Monkey’s database owned positions in Shell plc (NYSE:SHEL), with stakes valued at over $3.46 billion.
Harding Loevner mentioned Shell plc (NYSE:SHEL) in its Q1 2022 investor letter. Here is what the firm has to say:
“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multi-national companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”
7. Unilever PLC (NYSE:UL)
Dividend Yield as of October 25: 4.22%
Another best foreign stock on our list is Unilever PLC (NYSE:UL) which is a British multinational consumer goods company. In the past five years, the company has raised its dividends at a CAGR of 4.63%. Currently, it pays a quarterly dividend of $0.4343 per share for a dividend yield of 4.22%, as of October 25.
In September, Morgan Stanley initiated its coverage on Unilever PLC (NYSE:UL) with an Equal Weight rating. The firm mentioned that analysts are increasingly favoring UL in the food sector and expect growth in its earnings in the coming quarters.
In the second quarter of 2022, Unilever PLC (NYSE:UL) reported an operating cash flow of $8 billion and its free cash flow came in at €2.2 billion. The company’s strong cash flow signals continuous shareholder return. Its payout ratio stands at 75.8%.
At the end of Q2 2022, 21 hedge funds in Insider Monkey’s database owned stakes in Unilever PLC (NYSE:UL), compared with 23 in the previous quarter. These stakes hold a total value of over $813.3 million. Gardner Russo & Gardner was the company’s leading stakeholder in Q2.
Polen Capital mentioned Unilever PLC (NYSE:UL) in its Q2 2022 investor letter. Here is what the firm has to say:
“Multinational consumer goods company Unilever PLC (NYSE:UL) showed robust price increases overall, with minimal impact on volume, resulting in faster-than-expected sales growth during the quarter. Indeed, higher inflation can be a positive change for companies with favorable brands like Unilever as these conditions make it easier for the biggest brands to raise prices, continue spending on advertising, and take share. We believe the appointment of an activist investor to Unilever’s board in June will help spur additional growth.”
6. Novartis AG (NYSE:NVS)
Dividend Yield as of October 25: 4.28%
Novartis AG (NYSE:NVS) is a multinational pharmaceutical company, headquartered in Switzerland. The company is widely known for its oncology products and is also the leader in the field of generic drugs.
Novartis AG (NYSE:NVS) recently reported its third-quarter results and reported a 4% growth in its sales. The company generated $4.2 billion in free cash flow, up from $3.3 billion in the previous quarter. It is one of the best foreign stocks on our list as the company has always remained committed to shareholder obligation. In 2021, it paid $7.5 billion in dividends to its stakeholders.
Novartis AG (NYSE:NVS) has been raising its dividends consistently for the past 25 years. It currently offers an annual dividend of CHF 3.10 per share and has a dividend yield of 4.28%, as of October 25. The company can be a good addition to dividend portfolios alongside Express Company (NYSE:AXP), The Procter & Gamble Company (NYSE:PG), and Bank of America Corporation (NYSE:BAC).
Kepler Cheuvreux upgraded Novartis AG (NYSE:NVS) to Buy with a CHF 90 price target in September. The firm mentioned the company has reported strong sales but also needs to enhance its research and development abilities.
At the end of June 2022, 22 hedge funds tracked by Insider Monkey owned stakes in Novartis AG (NYSE:NVS), up from 21 in the previous quarter. These stakes have a total value of over $1.76 billion. Fisher Asset Management is the company’s largest stakeholder in Q2, owning stakes worth over $950.6 million.
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Disclosure. None. 10 Best Foreign Stocks With Dividends is originally published on Insider Monkey.
