High Yield Foreign Stocks - The Best of Both Worlds
High Yield Foreign Stocks are literally the best of both worlds. These worlds meaning a passive income stream from steady dividend payments, as well as diversification of geography, currency protection, geopolitical risk and growth rates.
There are several High Yield Foreign Stocks that Americans can trade on US exchanges via ADRs (American Depository Receipts). Examples of these companies paying a hefty dividend include Unilever (UN), British American Tobacco (BTI) and Taiwan Semiconductor Manufacturing Co. (TSM). There are many others, but what's key is to understand that this option exists and the benefits that can be derived.
Currency Protection - Since the US dollar is in question given Trillion dollar stimulus packages, various rounds of quantitative easing and a persistent high unemployment rate, it's helpful to hold shares of companies overseas. As the US dollar weakens, it translates into higher dollar-denominated returns over time. If anything, at least there's diversification of currency tied to these holdings which you can't get by solely holding US equities.
Dividend Income - Obviously, recurring (and increasing) dividend payouts are key and there are several companies delivering on that promise consistently for years now. Focus on companies that have the earnings growth to continue to increase dividend payouts and also review the prior history for any interruptions or abnormal patterns.
Geopolitical Diversification - While many like to consider the US the only "safe haven" for investing, it's becoming increasing hostile toward business. Not only does the deficit need to be addressed (likely through higher corporate and personal taxes), but regulation continues to increase and there are hints of discontent across the populous as a whole as home prices continue to decline and the gap in income widens. Therefore, by exposing your portfolio to numerous country investments, the geopolitical risk is diversified.
How to Buy Foreign Stocks
It's simple! Many of these high yield foreign stocks trade as an ADR as stated above, so you simply find out what the ticker symbol is and buy shares through a conventional online brokerage. In some cases, if they're not listed on a US exchange, it may be difficult to purchase without having access to an international bourse. However, there are literally hundreds of ADRs available to US investors as of this writing.
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