We recently compiled a list of 12 Best International Dividend Stocks to Buy Now. Since Canadian Natural Resources Ltd (NYSE:CNQ) ranks higher on our list, we have analyzed the stock in detail.
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.
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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).
4. Canadian Natural Resources Ltd (NYSE:CNQ)
Number of Hedge Fund Holders: 45
Canadian Natural Resources Ltd (NYSE:CNQ) is a Canadian oil and natural gas company. It currently offers a quarterly dividend of C$1.05 ($0.76) per share and its stock sports a yield of around 2.2%. It is one of the best dividend stocks on our list as the company has been growing its dividends for the past 25 consecutive years.
With a market cap of $76 billion, Canadian Natural Resources Ltd (NYSE:CNQ) is one of the largest companies in Canada. The company has a diversified portfolio of assets, a big part of which provide long-life and low-decline production of oil. The company estimates that 73% of its total liquid production came from these assets last year. Moreover, the company has been expanding its reserves and production capacity. With a break-even estimated at around $30 per barrel, Canadian Natural Resources Ltd (NYSE:CNQ) is well-positioned to generate substantial cash flow even in the current environment and can weather a potential drop in price that might be caused by a recession.
In the meantime, Canadian Natural Resources Ltd (NYSE:CNQ), besides rewarding its shareholders with a solid dividend, has been working on strengthening its balance sheet. The company ended the first quarter with $11.04 billion in debt, which was slightly higher than the $10.8 billion figure, but lower than $14.69 billion it had at the end of 2021. The company also grew its cash position to $1.40 billion at the end of March from $1.05 billion at the end of 2021. At the same time, Canadian Natural Resources ended March with just $1.82 billion in free cash flow, which was a substantial decline from $3.84 billion a quarter earlier. However, this decline is attributed to the company’s commitment to return all of its free cash flow to shareholders through dividend payments and stock buybacks.
Earlier this month, Canadian Natural Resources (NYSE:CNQ) conducted a two-for-one stock split, which should allow more investors to take advantage of the company’s growth prospects and enjoy stable dividend payouts. The split comes as the stock has enjoyed more than 400% appreciation since 2020.
According to Insider Monkey’s database, 45 hedge funds owned stakes in Canadian Natural Resources Ltd (NYSE:CNQ) with a total value of $2.5 billion, up from 41 funds in the previous quarter. Among these funds, the top shareholders are Donald Yacktman’s Yacktman Asset Management and Rajiv Jain’s GQG Partners, which own 30.08 million shares, and 19.82 million shares, respectively.
Overall, CNQ ranks 4th among the best international dividend stocks. You can visit 12 Best International Dividend Stocks to Buy Now to see other dividend stocks from the international market. While we acknowledge the potential of dividend stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.