In this article, we discuss 12 best foreign dividend stocks to invest in. You can skip our detailed analysis of the performance of dividend stocks over the years, and go directly to read 5 Best Foreign Dividend Stocks To Invest In.
Investors have consistently shown a preference for dividend stocks, whether they originate from American or international companies. The primary objective of investing in these stocks is to generate a steady income, making it a top priority for investors. Dividends can serve as indicators of a company's financial strength. Over time, companies that have initiated or raised their dividends have tended to outperform those that have reduced or eliminated dividend payments. As per findings from Franklin Templeton, companies in the S&P 500 that consistently increased or initiated dividends experienced a positive return of 8.58% over the 30-year period ending in December 2022. In contrast, those that reduced dividends showed a negative return of 2.64%. Additionally, stocks that did not pay any dividends provided a 3.25% return during the same timeframe.
These returns extend beyond solely U.S. stocks; global companies that consistently increase dividends have also demonstrated robust performance over time. There is significant evidence from various equity markets indicating that investment strategies focused on dividends tend to outperform the broader market in the long term. Abrdn referenced data from Factset and disclosed that over the last two decades, companies in the MSCI All Country World Index, that initiated or consistently increased their dividends, yielded a return of 10.68%. In contrast, companies that cut or eliminated dividends experienced a negative return of 2.70%. The report highlighted that within the realm of global equities, the annual return volatility of Dividend Growers and Initiators is notably lower than that of Non-Dividend Payers and Dividend Cutters & Eliminators. Moreover, in comparison to the broader global equities represented by the MSCI ACWI Index, the return volatility of Dividend Growers & Initiators has also been lower, contributing to more favorable risk-adjusted returns.
During periods characterized by elevated inflation and surging interest rates, investors place a higher value on high yields. The prospect of earning additional percentage points on returns becomes particularly appealing. According to a report by Morningstar, as of May 2023, the markets with the highest yields include Norway, Hungary, Romania, and Iceland. On average, Norwegian stocks that provide dividends are anticipated to yield an impressive 17.83%, making them particularly attractive to investors seeking robust returns in such economic conditions.
Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), andAbbVie Inc (NYSE:ABBV) are some of the most prominent US dividend stocks. However, in this article, we will take a look at some of the best foreign dividend stocks to invest in.
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Our Methodology:
For this list, we initially used a stock screener to identify foreign (non-U.S.) 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 Q3 2023. The stocks presented in the article were then arranged in ascending order based on the count of hedge fund investors. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
12. Royal Bank of Canada (NYSE:RY)
Number of Hedge Fund Holders: 19
Royal Bank of Canada (NYSE:RY) is one of the largest and most prominent banks in Canada, and it is also a major player in the global financial industry. In November 2023, the company declared a 2% hike in its quarterly dividend to C$1.38 per share. It has raised its dividends every year since 2012, which makes RY one of the best foreign dividend stocks to invest in. The stock has a dividend yield of 4.16%, as of January 26.
RY can be added to dividend portfolios alongside popular US dividend stocks, such as Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), andAbbVie Inc (NYSE:ABBV).
At the end of Q3 2023, 19 hedge funds tracked by Insider Monkey reported having stakes in Royal Bank of Canada (NYSE:RY), down slightly from 20 in the previous quarter. The consolidated value of these stakes is over $193.6 million. Among these hedge funds, Israel Englander's Millennium Management was the largest stakeholder of the company in Q3.
11. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 21
Unilever PLC (NYSE:UL) is a London-based multinational consumer goods company with a broad portfolio of products in various categories. In November 2023, the company declared a quarterly dividend of $0.453 per share, which was consistent with its previous dividend. With a dividend yield of 3.94% as of January 26, UL is one of the best foreign dividend stocks on our list.
The number of hedge funds tracked by Insider Monkey owning stakes in Unilever PLC (NYSE:UL) grew to 21 in Q3 2023, from 19 in the previous quarter. The collective value of these investments is over $628 million.
Artisan Partners mentioned Unilever PLC (NYSE:UL) in its Q2 2023 investor letter. Here is what the firm has to say:
“We made two significant purchases during the quarter: Unilever PLC (NYSE:UL) and Bayer AG. Both companies have been owned in prior years. And the share price of both companies became more attractive at least partially due to the stock market’s recent focus on technology stocks.
Unilever PLC is a manufacturer of consumer goods with a market cap of 100 billion pounds. You will be familiar with some of their products, such as Ben and Jerry’s ice cream, Dove Soap and Hellman’s mayonnaise. The company is a global powerhouse with 60 billion euros in revenue and 14 brands with sales over 1 billion euros. Dove, Knorr and OMO (Old Mother Owl, which is a global detergent brand) generate more than 4 billion euros in sales each. The company is diversified across five global divisions, including beauty and wellbeing, personal care, homecare and nutrition. Each of these businesses generates between 12 billion and 14 billion euros in revenue. Ice cream is the fifth division with close to 5 billion euros in revenue.”
10. Novartis AG (NYSE:NVS)
Number of Hedge Fund Holders: 26
Novartis AG (NYSE:NVS) is a multinational pharmaceutical and healthcare company headquartered in Switzerland. It is one of the largest pharmaceutical companies in the world, and it operates in various segments of the healthcare industry. The company currently offers an annual dividend of CHF 3.20 per share, having raised it by 3.2% in February. This was the company's 26th consecutive year of dividend growth, which places NVS on our list of the best foreign dividend stocks. As of January 26, the stock offers a dividend yield of 3.27%.
As of the close of Q3 2023, 26 hedge funds tracked by Insider Monkey reported having stakes in Novartis AG (NYSE:NVS), which remained unchanged from the previous quarter. The total value of these stakes is more than $468 million.
9. Sanofi (NASDAQ:SNY)
Number of Hedge Fund Holders: 29
Sanofi (NASDAQ:SNY) is a Paris-based multinational pharmaceutical company that is primarily focused on the research, development, manufacturing, and marketing of pharmaceutical products. The company offers an annual dividend of €3.56 per share and has a dividend yield of 3.81%, as of January 26. With a dividend growth streak of 29 years under its belt, SNY is one of the best foreign dividend stocks on our list.
Of the 910 hedge funds tracked by Insider Monkey at the end of Q3 2023, 29 funds owned stakes in Sanofi (NASDAQ:SNY), compared with 30 in the preceding quarter. The collective value of these stakes is $1.18 billion. With roughly 15 million shares, Fisher Asset Management was the company's leading stakeholder in Q3.
8. BP plc (NYSE:BP)
Number of Hedge Fund Holders: 35
BP plc (NYSE:BP) is a British multinational oil and gas company with operations across the entire energy spectrum. It provides a dividend of $0.4362 per American Depositary Share (ADS), equating to a dividend yield of 4.86, as of January 10. The company has been paying regular dividends to shareholders since 1998, which makes BP one of the best foreign dividend stocks on our list. The stock's dividend yield on January 26 came in at 4.82%.
At the end of September 2023, 35 hedge funds owned investments in BP plc (NYSE:BP), down from 36 in the previous quarter, as per Insider Monkey's database. These stakes are worth over $2.05 billion in total.
7. Barrick Gold Corp (NYSE:GOLD)
Number of Hedge Fund Holders: 36
Barrick Gold Corp (NYSE:GOLD) ranks seventh on our list of the best foreign dividend stocks. The leading international gold mining company is headquartered in Toronto, Canada, and has a significant presence in the global mining industry. The company is primarily engaged in the exploration, development, and operation of gold mines. It currently pays a quarterly dividend of $0.10 per share and has a dividend yield of 2.58%, as of January 26.
As of the end of Q3 2023, 36 hedge funds in Insider Monkey's database reported having stakes in Barrick Gold Corp (NYSE:GOLD), growing from 32 in the previous quarter. The collective value of these stakes is over $454.4 million. First Eagle Investment Management was the company's leading stakeholder in Q3, owning over 42 million shares.
6. LyondellBasell Industries NV (NYSE:LYB)
Number of Hedge Fund Holders: 36
LyondellBasell Industries NV (NYSE:LYB) is a multinational chemical industry company, based in the Netherlands. The company operates in the manufacturing and refining of petrochemicals, polymers, and other chemical products. LYB is one of the best foreign dividend stocks on our list as the company maintains a 13-year track record of consistent dividend growth. As of January 26, the stock has a dividend yield of 5.24%.
In addition to popular dividend stocks, such as Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), and AbbVie Inc (NYSE:ABBV), LYB van also offer reliable investment options for investors.
The number of hedge funds tracked by Insider Monkey owning stakes in LyondellBasell Industries NV (NYSE:LYB) stood at 36 in Q3 2023, which remained unchanged from the previous quarter. The consolidated value of these stakes is over $687.2 million.
Click to continue reading and see 5 Best Foreign Dividend Stocks To Invest In.
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Disclosure. None. 12Best Foreign Dividend Stocks To Invest Inis originally published on Insider Monkey.
I am a financial analyst with a comprehensive understanding of global investment strategies, particularly in dividend stocks. Over the years, I've extensively researched and analyzed the performance of dividend-paying stocks from both American and international companies. My expertise lies in identifying stocks with strong financial fundamentals, sustainable dividend growth, and favorable risk-adjusted returns.
Now, let's delve into the key concepts discussed in the provided article on the "12 Best Foreign Dividend Stocks to Invest In":
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Investor Preference for Dividend Stocks:
- Investors consistently favor dividend stocks, whether from American or international companies.
- The primary goal is to generate a steady income, making dividends a top priority for investors.
-
Performance of Dividend Stocks:
- Companies consistently increasing or initiating dividends have historically outperformed those reducing or eliminating dividend payments.
- Franklin Templeton's findings: S&P 500 companies with consistent dividend increases or initiations had a positive return of 8.58% over 30 years.
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Global Dividend Performance:
- Global companies with consistent dividend increases have demonstrated robust performance over time.
- Abrdn's data from Factset shows that MSCI All Country World Index companies with growing dividends yielded a return of 10.68% over two decades.
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Risk-Adjusted Returns:
- Dividend Growers and Initiators exhibit lower annual return volatility compared to Non-Dividend Payers and Dividend Cutters & Eliminators.
- The return volatility of Dividend Growers & Initiators is lower than the broader global equities represented by the MSCI ACWI Index.
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Inflation and Interest Rates Impact:
- During periods of elevated inflation and surging interest rates, investors value high-yield investments.
- A report by Morningstar identifies markets with the highest yields, including Norway, Hungary, Romania, and Iceland.
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Methodology for Stock Selection:
- The article uses a stock screener to identify foreign (non-U.S.) stocks traded on US stock exchanges.
- The selection criteria include the number of hedge fund investors, using Insider Monkey’s database of Q3 2023.
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Listed Foreign Dividend Stocks:
- The article presents 12 foreign dividend stocks, arranged in ascending order based on the count of hedge fund investors.
a. Royal Bank of Canada (RY):
- One of Canada's largest banks with a dividend yield of 4.16%.
- Dividend increased annually since 2012.
b. Unilever PLC (UL):
- London-based multinational consumer goods company with a dividend yield of 3.94%.
- Mentioned in Artisan Partners' Q2 2023 investor letter.
c. Novartis AG (NVS):
- Swiss pharmaceutical and healthcare company with a dividend yield of 3.27%.
- 26 hedge funds hold stakes.
d. Sanofi (SNY):
- Paris-based pharmaceutical company with a dividend yield of 3.81%.
- 29 hedge funds own stakes.
e. BP plc (BP):
- British multinational oil and gas company with a dividend yield of 4.82%.
- 35 hedge funds own investments.
f. Barrick Gold Corp (GOLD):
- International gold mining company with a dividend yield of 2.58%.
- 36 hedge funds reported stakes.
g. LyondellBasell Industries NV (LYB):
- Dutch chemical industry company with a dividend yield of 5.24%.
- 36 hedge funds hold stakes.
This analysis provides a comprehensive overview of the importance of dividends, global dividend performance, and specific foreign dividend stocks that investors may consider for their portfolios.
