We recently compiled a list of 12 Best International Dividend Stocks to Buy Now. Since Royal Bank of Canada (NYSE:RY) is part of the 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.
A series of ATMs in a row, symbolizing the company’s 24/7 banking services.
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).
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.
Overall, RY ranks 10th 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.