We recently compiled a list of the 12 Best International Dividend Stocks To Buy Now. In this article, we are going to take a look at where UBS Group AG (NYSE:UBS) stands against the other international dividend stocks.
Dividend stocks have been grabbing investors’ attention for a while now. According to JP Morgan, over the last two decades, global dividends per share have increased at an annual rate of 5.6%, but analysts expect this to rise to 7.6% in the future, driven by historically low payout ratios. During the 2020 pandemic, many companies cut dividends, but as earnings have recovered, especially in Big Tech and AI, dividends have not kept up. With payout ratios at 25-year lows, simply returning to normal could add 2% annual growth over the next five years.
After slowing down post-COVID, global dividend growth made a surprising comeback last year, increasing 8% and adding an extra $180 billion in payouts despite ongoing economic and geopolitical challenges. According to S&P Global, this was largely driven by record dividend initiations in US tech, European banks, Japan’s auto industry, and solid growth from China. Even oil and gas companies held strong despite market volatility. Looking ahead, experts predict global dividends will hold steady at $2.3 trillion in 2025.
Regionally, developed Asia, which includes Japan, Hong Kong, Australia, South Korea, and Singapore, is looking at a 3% rise in dividends this year. Europe, on the other hand, is expected to see a 3.4% decline. In emerging markets, the trends are mixed. Asia, led by China, India, and Taiwan, is on track for a 5% increase, while dividends in the Middle East and Africa could drop by 20%, mainly because Saudi Aramco’s special dividend program ended. Latin America is also expected to see a small dip of around 4%.
When it comes to sectors, banks and energy companies remain the biggest dividend payers. Banks are expected to distribute around $380 billion globally, but after four years of rapid 20% growth, they are now down to just 2%. Banks are playing it safe, waiting to see how interest rates move. Given this, we will take a look at some of the best international dividend stocks.
Our Methodology
For this article, we used the BlackRock International Dividend ETF to filter out dividend stocks listed on US exchanges but headquartered internationally. We focused on picking stocks that were most popular among hedge funds. The list below is ranked in the ascending order of Q3 2024 hedge fund sentiment, and dividend yields are mentioned as of February 11.
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)
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UBS Group AG (NYSE:UBS)
Dividend Yield as of February 11: 1.00%
Number of Hedge Fund Holders: 25
Headquartered in Zurich, Switzerland, UBS Group AG (NYSE:UBS) is a global financial services company that caters to private, institutional, and corporate clients. It operates through five divisions – Global Wealth Management, Personal & Corporate Banking, Asset Management, Investment Bank, and Non-core and Legacy.
UBS Group AG (NYSE:UBS) reported strong Q4 and full-year financial performance, with a net profit of $5.1 billion and an 8.7% return on CET1 capital in 2024, reflecting successful integration efforts and global business growth. The CET1 capital ratio stood at 14.3%, ensuring a strong capital position. The company also experienced revenue growth in global wealth management and investment banking. For Q4 2024, profit before tax tripled to $1.8 billion, total revenues rose 6% to $11 billion, and EPS reached $0.23.
To redistribute capital gains amongst shareholders, UBS Group AG (NYSE:UBS) plans to propose a $0.90 per share dividend, which is up 29% year-over-year. The dividend will be distributed on April 17, to shareholders on record as of April 16. The bank also proposed a share repurchase plan of up to $3 billion this year.
According to Insider Monkey’s third-quarter database, 25 hedge funds were bullish on UBS Group AG (NYSE:UBS), compared to 33 funds in the prior quarter. Pzena Investment Management is a prominent stakeholder in the company, with 30.8 million shares worth nearly $802.7 million.
Overall UBS ranks 12th on our list of the best international dividend stocks to buy. While we acknowledge the potential of UBS 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 UBS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
