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Investors have a lot of anxiety when it comes to international investing. But one of the keys to investing is diversification. This includes expanding beyond just industries and markets, but across geographical markets.
Assuming investors can look past the negative headlines related to the Iraqi conflict and Russian-Ukraine standoff, there are plenty of great international investments.
Dividends are another great way to help control risk when investing in international markets. International dividend stocks yielding 4% are also very enticing at a time when the S&P 500 yields an average of 2%. The top 4 international dividend stocks all yield over 4%.
1. CNOOC Ltd (NYSE: CEO)
This is China’s largest offshore producer of crude oil and natural gas. It also operates in Indonesia, Australia, Nigeria, Uganda, Argentina, the United States, and Canada. CNOOC had proved reserves of 4.4 billion barrels-of-oil equivalent at the end of 2013. Compare that to Chevron’s 11.2 billion barrels-of-oil equivalent.
CNOOC trades at a P/E ratio of only 9.Its debt-to-equity ratio is just under 40%. It has one of the best returns on assets in the oil and gas exploration market at 23%. It also offers one of the best dividend yields at 4.1%, which is only a 32% payout of earnings.
2. Bank of Montreal (NYSE: BMO)
Bank of Montreal is the fourth largest bank in Canada by assets. Earlier this year it acquired F&C Asset Management, doubling the size of its institutional asset management business in Europe. It’ll also be able to utilize the F&C expertise in its North American and Asian client base. Only 1% of F&C asset base were in North America.
Bank of Montreal will get a boost from an improvement in the U.S. economy and housing market. A couple years ago, Bank of Montreal made its largest acquisition ever by buying up Marshall & Ilsley Corp. It effectively doubled its U.S. deposits and branches.
Bank of Montreal trades at a P/E ratio of only 12, which is below some of the U.S.’s largest banks. Its 15% return on equity also towers over the likes of Bank of America and JPMorgan Chase. What’s more is that it offers a 4% dividend yield. Its payout ratio is 47% and its debt to equity of 13% is well below its banking peers.
3. Westpac Banking Corp (NYSE: WBK)
The Australian bank is seeing positive strength from a steady Australian economy. Westpac has noted that its business banking customers have improved balance sheets. With this, the recovery in demand for business credit should begin. As well, individuals have been deleveraging over the last few years and should be ready to boost their demand for housing credit.
Westpac trades at a P/B ratio of 2.3, which is below many of the other international banking institutions. But it has a return on equity of 15% and dividend yield of 5.2% that’s superior to the likes of HSBC and Barclays. The bank’s low debt-to-equity ratio of 22% suggests Westpac won’t have any trouble maintaining its superior dividend payments.
4. ENSCO PLC (NYSE: ESV)
The U.K. based offshore drilling company has the second largest offshore drilling fleet in the world. It also has the newest fleet of ultra-deep drilling rigs in the industry. It’s also a very geographically diverse company. It owns and operates 74 offshore drilling rigs, with about 29% of its rig fleet is located in North and South America.
It’s been steadily increasing its exposure to deepwater drilling over the last few years. Revenues from the Gulf of Mexico accounted for 35% of Ensco’s company-wide revenues last year. The gradual recovery in the Gulf of Mexico, from the 2010 Macondo oil spill, is a big positive for Ensco. At the time of the incident, there were 33 rigs in the Gulf of Mexico. This number is up to 41 as of now. The total rigs operating in the area are expected to hit the mid-50s by year-end.
Ensco trades at 9 times earnings, and coupled with Wall Street’s growth expectations for the next five years, its P/E to growth (PEG) ratio is a low 0.7. Ensco offers one of the most attractive dividends in the large cap space, with a yield of 5.5%. Its payout is 42% of earnings and its debt-to-equity is a manageable 37%.
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International markets don’t have to be all that scary. The top 4 international dividends to own are great ways to get solid yields, while also gaining impressive diversification. This has proven to be a great recipe for helping build wealth over the long-term.
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