We recently compiled a list of 12 Best International Dividend Stocks to Buy Now. Since AstraZeneca plc (NASDAQ:AZN) 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.
Image by Steve Buissinne from Pixabay
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).
3. AstraZeneca plc (NASDAQ:AZN)
Number of Hedge Fund Holders: 46
AstraZeneca plc (NASDAQ:AZN) is another healthcare company that made it to our list of the best dividend stocks from the international market. In 2014, the company aimed for an ambitious target of generating $45 billion in annual revenue by 2023, which was met with skepticism from Wall Street. Despite this, the company not only achieved this target but also outperformed the broader market in total returns, including dividends, during this period. The stock has surged in value since 2014, more than tripling in price, following the company’s investor day event, which took place shortly after an unsuccessful takeover attempt by Pfizer. In 2024, the company again made a bold claim of achieving $80 billion in revenues by 2030, which we appreciate, but it doesn’t guarantee they will replicate their previous success. The company plans to launch 20 new medicines by 2030, which is inherently risky due to the certain outcomes of scientific research. In addition, competition and pricing pressures can affect revenue forecasts. AstraZeneca plc (NASDAQ:AZN) is relying heavily on its oncology portfolio to drive growth, which may not be enough to achieve a target of $80 billion. Its oncology segment showed a 26% year-over-year growth in the first quarter of 2024, which does promise strong performance ahead, though there remains some uncertainty.
That said, AstraZeneca plc (NASDAQ:AZN) actively invests in research and development (R&D). In fact, the company’s R&D represented 24% of its total revenue in 2023. This may benefit the company in achieving its revenue goal. Moreover, the stock supports a dividend yield of over 3% and has a strong dividend policy, which reflects the company’s commitment to returning value to shareholders. Its dividend yield is higher than most of its industry peers and the broader market’s yield of 1.35%. The stock has a forward P/E of 18.66, which isn’t too good considering its recent earnings and forecasts. The stock is currently trading at a share price of $79.
On April 11, AstraZeneca plc (NASDAQ:AZN) declared a 7% hike in its annual dividend to $3.10 per share. The stock has a dividend yield of 3.05%, as of June 3.
At the end of March 2024, 46 hedge funds held stakes in AstraZeneca plc (NASDAQ:AZN), compared with 48 in the previous quarter, as per Insider Monkey’s database. These stakes have a total value of over $2 billion.
Overall, AZN ranks 3rd 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.
