We recently compiled a list of the 10 Best Foreign Stocks With Dividends For Passive Income. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against the other foreign stocks.
In August, S&P Global Market Intelligence reported that US dividends are set to grow around 5.1% by the close of 2024. In the United States, the energy sector dominated dividend contributions, with pharmaceuticals, financial services, and banks trailing behind. Looking beyond the US, we see similar growth trends in international markets. For example, S&P expects a 3.9% year-over-year recovery in dividends in Canada, resulting in $74.4 billion in dividend payouts for 2024. Interest rate cuts by the Bank of Canada will aid this rebound in dividends. Two-thirds of the overall Canadian dividend distributions are attributed to the financial and energy sectors.
By year-end 2024, European dividends are projected to grow 4.2% year-over-year to $531.5 billion, with the banking and insurance sectors leading the charge and counteracting the weakness in the European transportation, materials, and energy industries. In the Asia-Pacific region, dividend growth is also projected to be strong. Developed markets in the Asia-Pacific – Australia, Japan, Hong Kong SAR, New Zealand, South Korea, and Singapore – are expected to grow their dividends to $370.5 billion by the end of 2024, reflecting a 5.8% year-over-year increase. According to S&P Global, 2024 is the year that Japan will overtake Hong Kong SAR in terms of the highest dividend contributions in the developed Asia-Pacific market, with an expected growth rate of over 10% for the year.
Turning back to Canada, Ryan Bushell, president and portfolio manager at Newhaven Asset Management, joined BNN Bloomberg on February 4 and discussed the Canadian stock market outlook. He commented that the current hostility from the US should be a wake-up call for Canadian policymakers, noting that it is impractical to isolate the US but Canada should have alternative trading partners in case political tensions influence economic decisions. Bushell mentioned that having export options other than oil is crucial and that Canada should look into exporting natural gas and liquefied petroleum gases as well. In terms of investment strategies, the portfolio manager emphasized that sustainable and stable companies make for excellent long-term investments, regardless of who occupies the White House. This includes critical infrastructure companies, which cater to people’s needs rather than wants. He went on to recommend his top stock picks, which were companies with steady dividend policies, high yields, and 40-60% of their revenues coming from the US, to navigate the messy tariffs. Bushnell prefers Canadian energy stocks since these companies are seeking to export to more countries, which will result in higher gains.
Our Methodology
For this article, we used the Finviz stock screener to filter out dividend stocks listed on US exchanges but headquartered internationally. We focused on picking stocks with a consistent record of paying dividends, offering dividend growth, and being financially stable to steer clear of yield traps. The list below is ranked in the ascending order of Q3 2024 hedge fund sentiment, and dividend yields are mentioned as of February 3.
At Insider Monkey, we are obsessed with 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)
A close-up of a complex network of integrated circuits used in logic semiconductors.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Dividend Yield as of February 3: 1.34%
Number of Hedge Fund Holders: 158
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) tops our list of the best foreign stocks for dividend investors. TSM is the largest chipmaker in the world. This semiconductor giant remains unaffected by President Trump’s tariff threats, with Taiwan’s economy ministry noting the interdependence between the US tech industries and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), calling it a “win-win business model”.
In Q4 2024, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) reported that the consolidated revenue of NT$868.46 billion increased 14.3% year-over-year, net income of NT$374.68 billion rose 15.2% compared to the prior year quarter, and diluted earnings per share came in at NT$14.45. TSM commenced cash dividends in 2004, and it has never engaged in dividend cuts over the years. In 2024, the company forked over US$11.3 billion in dividends.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a Wall Street favorite. In Q3 2024, 158 hedge funds reported owning stakes in TSM, compared to 156 funds in Q2. Ken Fisher’s Fisher Asset Management is the largest shareholder of the company, with a position worth nearly $5 billion.
Overall TSM ranks 1st on our list of the best foreign stocks with dividends for passive income. While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSM 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.
