In this article we shared our list of the 12 best international dividend stocks to buy now.
As we move toward the second half of 2024, investors are eagerly preparing for the direction that the stock market will take for the remainder of the year. The first quarter of 2024 marked the broader market’s strongest performance for the first quarter since 2019. However, the question remains whether this trend will persist throughout the year. With geopolitical tensions, high interest rates, and higher prices, investors are looking for ways to diversify their portfolios. In this regard, international stocks, which usually fly under the radar, are the most favorable option to explore. And they become even more appealing when they pay dividends.
Dividend stocks are the bread and butter of a diversified portfolio. They have represented nearly 34% of the market’s overall return from 1940 to 2023, with even better performance during periods of high inflation. American companies are mainly known for paying dividends, but foreign counterparts are not far behind in this regard. Expanding your portfolio globally could help you avoid some of the specific challenges faced in the US. For instance, European banks are subject to tighter regulations, resulting in lower levels of interest-rate risk. With a more relaxed regulatory environment, dividends could potentially increase, and buybacks might rise in the international market. In fact, the markets with the highest yields are Norway, Hungary, Romania, and Iceland.
In 2023, Europe played a significant role in driving growth, with record dividend payouts growing by 10.4% compared to the previous year on an underlying basis, according to a report by Janus Henderson. The report further mentioned that annual dividends for the region grew from nearly $169 billion in 2020 to $301 billion in 2023. The trend is expected to continue this year as well as corporate leaders, especially in Europe and Japan, appear to be striking a balance between investing in capital expenditures and meeting operating cash flow requirements, while also showing an inclination to return cash to shareholders through dividends. According to FactSet data, European dividends per share are expected to grow at a CAGR of 8.5% by 2025.
There are no certainties in investing, of course. But we have compiled a list of some of the best dividend stocks from the international market to offer exposure to our readers.
Our Methodology:
For this list, we initially used a stock screener to identify foreign (non-U.S.) dividend stocks that are traded on US stock exchanges. Subsequently, from this dataset, we selected 12 stocks that boasted the highest number of hedge fund investors from Insider Monkey’s database of Q1 2024. The stocks presented in the article were then arranged in ascending order based on the count of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
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12. HSBC Holdings plc (NYSE:HSBC)
Number of Hedge Fund Holders: 17
HSBC Holdings plc (NYSE:HSBC) is a London-based financial services and banking company that offers a wide range of related services to its consumers. On April 30, the company announced an interim dividend of $1.55 per ADS, which also includes a special dividend of $1.05 per ADR. This special dividend comes from the proceeds of selling its Canadian banking business to the Royal Bank of Canada, a transaction that was finalized on March 28, 2024. With a dividend yield of 7% as of June 3, HSBC is one of the best dividend stocks on our list.
In the first quarter of 2024, HSBC Holdings plc (NYSE:HSBC) reported revenue of $20.8 billion, which showed a 3% hike from the same period last year. However, the company’s net interest income fell by $0.3 billion to $8.7 billion. The stock has declined over the last two years amid investors’ concerns over a slowdown in Asia. The Chinese economy is expected to slow-down from a 5% increase in GDP in 2023 to 3.4% by 2028, according to a February report from the International Monetary Fund. Hong Kong economy is also struggling to get back on its feet after the pandemic with growth expected to decline to 2.8% in 2024 from 3.2% in 2023.
Nonetheless, HSBC powers on with its focus on the region. In addition to selling Canadian banking business, HSBC Holdings plc (NYSE:HSBC) is on track to sell its business in Argentina this year and recent reports suggest that even sales of some German units are on the table. This is on top of the exits from countries like Russia and Greece, as well as other exits planned for the nearest future. The banking giant is currently searching for a new CEO and reportedly Asian expertise is a major factor in the selection process. Moreover, HSBC has recently agreed to acquire Citigroup Inc (NYSE:C)’s Chinese retail wealth management with the deal expected to close later this year.
In this way, HSBC is focusing on a region where it already generates a lot of money (more than half of its revenue) and the stock is trading at a discount due to concerns regarding geopolitical tensions in the region, as well as a slowdown in GDP growth. However, we believe these concerns are an overreaction and taking into account the solid dividend yield, HSBC Holdings plc (NYSE:HSBC) looks like a bargain.
At the end of Q1 2024, 17 hedge funds tracked by Insider Monkey reported having stakes in HSBC Holdings plc (NYSE:HSBC), up from 15 in the previous quarter. These stakes have a collective value of nearly $70.7 million. Israel Englander remained bullish on the stock, boosting his stake in the company by over 1800% during Q1 2024.
11. British American Tobacco p.l.c. (NYSE:BTI)
Number of Hedge Fund Holders: 19
British American Tobacco p.l.c. (NYSE:BTI) is a British company that specializes in the manufacturing of cigarettes, tobacco, and other related nicotine products. The company currently pays a quarterly dividend of $0.7431 per share, growing it by over 6% in February this year. The stock has a dividend yield of 9.42%, as of June 3. It is one of the best dividend stocks to buy from the international market.
British American Tobacco p.l.c. (NYSE:BTI) benefits from its industry’s resilience, as the tobacco sector remained stable during the pandemic while other industries experienced downturns. That said, the industry now faces challenges due to declining smoking rates and strict regulations. Given these current setbacks, BTI is all set to introduce ‘reduced risk products’, such as vaping, as alternatives to traditional tobacco. The company trades at a P/E multiple of 7x, which shows that it is relatively cheap based on its strong earnings growth potential and competitive position in the market. However, does the stock’s valuation support its viability as a strong investment option? Broyhill Asset Management spoke about this in its Q4 2023 investor letter:
“The largest detractors to performance over the quarter were LatAm airports (ASR, OMAB, PAC), Bayer, and British American Tobacco p.l.c. (NYSE:BTI). After years investing across the tobacco sector, it became increasingly clear that owning anything other than the global leader – Philip Morris – made little sense. Consequently, we liquidated our investment in British American Tobacco after deciding that the (seemingly) cheap valuation wasn’t worth the mental anguish. In a hollow victory, shortly after our sale, management promptly wrote down the value of its US tobacco brands by $31.5 billion, sending shares cratering.”
British American Tobacco p.l.c. (NYSE:BTI)’s stock has appreciated by 4.13% so far this year. As of the close of Q1 2024, 19 hedge funds in Insider Monkey’s database held stakes in the company, down from 22 in the preceding quarter. These stakes are worth over $588.6 million in total. Ken Griffin was bullish on the stock as his hedge fund, Citadel Investment Group, increased its position in the company by 464% during the quarter.
10. Royal Bank of Canada (NYSE:RY)
Number of Hedge Fund Holders: 20
Royal Bank of Canada (NYSE:RY) ranks tenth on our list of the best dividend stocks. The global financial services company has recently declared a 3% hike in its quarterly dividend to C$1.42 ($1.04) per share. This marked the company’s 13th consecutive year of dividend growth. The stock supports a dividend yield of 3.80%. Its revenue for the second quarter of 2024 showed a 13.7% growth on a year-over-year basis at C$14.15 billion ($10.35 billion).
High interest rates in Canada was beneficial for Royal Bank of Canada (NYSE:RY) as it has positively impacted the bank’s net interest income. This is primarily attributed to the bank’s ability to earn interest on Federal Funds and bank deposits. Moreover, the company has experienced growth in both deposits and loans in recent years, contributing to the growth in its net income as well. The bank has a strong market share in Canada and finalized the purchase of HSBC Canada on March 28. Since then, the stock has appreciated by over 8% and has gained 19.4% over the past 12 months. This acquisition can give a boost to the company’s revenue, potentially adding up to $700 million. At the same time, with the Bank of Canada having recently cut the rates, Royal Bank of Canada (NYSE:RY) is expected to benefit from more loans being taken and more acquisitions taking place in the capital markets.
Royal Bank of Canada (NYSE:RY) was a part of 20 hedge fund portfolios at the end of March, up from 19 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $133.2 million.
9. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 20
Unilever PLC (NYSE:UL) is a multinational consumer goods company, headquartered in London. The company operates in a wide range of sectors of the consumer goods industry, including personal care, food and beverages, and cleaning agents. On May 15, the company declared a quarterly dividend of $0.455 per share, which was in line with its previous dividend and which provides its stock a yield of 3.42%.
Companies from the consumer staples industry are known for adding stability to a portfolio due to their defensive nature. Unilever PLC (NYSE:UL) also offers products and services that are in demand, irrespective of the market conditions. Though the sector is experiencing a little disruption because of high interest rates and investors’ preference for AI stocks, companies in this sector reported stable results for the past several quarters. Unilever PLC (NYSE:UL) reported an underlying sales growth of 4.4% on a year-over-year basis in the first quarter of 2024. In addition to this, its volume growth increased to 2.2%, while its competitor, Procter & Gamble Co (NYSE:PG) saw flat sales volume in the first quarter. Unilever has a significant foothold in emerging markets, reporting underlying sales growth of 5.4% and volume growth of 3.9%. Its recent earnings have given investors optimism about the company’s streamlined business operations. Moreover, Unilever PLC (NYSE:UL) expects this year’s underlying sales growth to be in the range of 3% to 5%, in line with its multi-year forecast.
In addition to its strong financial results, Unilever PLC (NYSE:UL) also has a clear plan for future projects. The company is rapidly implementing its Growth Action Plan, which is supported by its commitment to concentrate on fewer initiatives but doing them better and with greater impact.
Insider Monkey’s data for the first quarter indicates that 20 hedge funds owned stakes in Unilever PLC (NYSE:UL) with a total value of $952.5 million, a decrease from 25 in the previous quarter. Israel Englander’s Millennium Management has boosted its position in the company by 200% to 1.78 million shares.
8. Sanofi SA (NASDAQ:SNY)
Number of Hedge Fund Holders: 24
Next on our list of best international dividend stocks is French pharmaceutical company Sanofi SA (NASDAQ:SNY), whose stock has a yield of 4.17%. In February, Sanofi raised its annual dividend by 5.6% to €3.76 ($4.09) per share. This marked the 29th annual dividend hike for the company.
Sanofi SA (NASDAQ:SNY)’s stock took a big hit in October after the company decided to abandon its previously set 2025 profit target. In addition, Sanofi also made significant changes to its business strategy to concentrate on its core pharmaceutical business. The company is in the process of spinning off its consumer healthcare division, which contributes around 10% of its revenue. The division is expected to be valued at around €20 billion ($21.78 billion).
Sanofi SA (NASDAQ:SNY) started 2024 on a positive note, reporting €10.5 billion ($11.43 billion) in net sales for the first quarter of the year, up by 7% on the year and beating the estimates by some $300 million. The company’s eczema drug, Dupixent, accounted for roughly €3 billion ($3.27 billion) of the top line and showed a 25% increase from the prior-year period. This performance has put the company on a pace to achieve €13 billion ($14.16 billion) in Dupixent sales in 2024. The company’s promising outlook for Dupixent sales, its recent earnings, and the potential spin-off of its Consumer Healthcare division could all contribute to a boost in the stock’s value.
There were 23 funds tracked by Insider Monkey that held shares of Sanofi SA (NASDAQ:SNY) with a total value of $1.0 billion, down by nine funds over the quarter.
7. Novartis AG (NYSE:NVS)
Number of Hedge Fund Holders: 30
Novartis AG (NYSE:NVS) ranks seventh on our list of dividend stocks, sporting a yield of 3.58%. The Swiss multinational pharmaceutical company has been increasing its dividends for the past 26 years and currently has an annual dividend of CHF 3.20 ($3.60) per share.
For the first quarter of 2024, Novartis AG (NYSE:NVS) reported double-digit sales growth and core margin expansion. The company’s net sales rose by 11% on a year-over-year basis to $11.8 billion and its core net income stood at $3.68 billion, up by 14% from the same period last year. Moreover, both EPS of $1.80 and revenue topped the consensus estimates by $0.12 and $331 million, respectively. In addition the company raised its full-year guidance and now expects between high single-digit to low double-digit net sales growth and between low double-digit to mid-teens appreciation in core operating income.
Novartis AG (NYSE:NVS) is generating a big chunk of revenue from two drugs: Entresto and Cosentyx. Both drugs accounted for $3.2 billion in sales in the first quarter. However, Entresto patent is set to expire in 2025 and Cosentyx main patent is expected to expire in 2026. Nonetheless, Novartis has a robust pipeline and has potentially 20 regulatory approvals by 2026.
The number of hedge funds tracked by Insider Monkey owning stakes in Novartis AG (NYSE:NVS) grew to 30 from 28 in the first three months of 2024.
6. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 32
Enbridge Inc. (NYSE:ENB) is a Canadian multinational pipeline energy company that transports oil and gas. The company pays an annual dividend of $3.66 per share, having recently increased it. Enbridge’s stock sports a yield of around 7%, which is quite high. As you must know, buying a stock solely because of a high dividend yield is never a good idea. Nonetheless, in case for Enbridge is also has a robust core business that suggests that the company will continue to generate enough cash to continue its payouts.
As Enbridge Inc. (NYSE:ENB) is generating most of its revenue from oil transportation, its stock price is correlated to oil prices, as lower oil prices mean less demand for oil transportation and less revenue for Enbridge, as a result. With oil prices range-bound for the past year, it’s unsurprising that Enbridge’s stock has barely moved. However, the company appears to take steps to diversify their business into renewable energy. However, this represents a tiny fraction of the company’s revenue (around $95 million in the first quarter). Overall, Enbridge Inc. (NYSE:ENB) reported revenue of $8.07 billion, which missed the consensus estimate by $862 million, while its EPS of $0.49 was lower than the expected $0.59 figure.
Enbridge Inc. (NYSE:ENB) plays an important role in the North American economy through its expanding energy infrastructure. The company transports approximately 30% of the total crude oil production in the region and around 20% of natural gas consumed in the US. This market share highlights the importance of Enbridge Inc.’s (NYSE:ENB) pipelines and facilities in supplying energy resources to the region. To further solidify its market presence, Enbridge Inc. (NYSE:ENB) has recently completed the acquisition of three companies from Dominion Energy for $14 billion. The three companies, EOG, Questar Gas, and the Public Service Company of North Carolina supply natural gas to roughly three million households and businesses and operate around 77,000 miles of pipelines.
The acquisition of Dominion assets do raise some concerns regarding the health of Enbridge’s balance sheet. The company had around $59 billion in long-term debt at the end of March and another $10.68 billion in current liabilities. On the other hand it ended the first quarter with $881 million in cash, $3.6 billion in trade receivables and unbilled revenues. Looking even further we can see that Enbridge Inc (NYSE:ENB) has a debt-to-EBITDA of 5.41, which does seem quite high. In this way, there is a high chance that Enbridge will focus on paying down its debt and might do so at the expense of further dividend hikes.
As of the end of March 2024, 32 hedge funds tracked by Insider Monkey hold stakes in Enbridge Inc. (NYSE:ENB), growing from 28 in the previous quarter. These stakes have a collective value of nearly $260 million. Ken Griffin’s Citadel Investment Group was bullish on the stock, boosting its stake in the company by 57% during the quarter.
