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Don’t let the word “international” scare you.
In any non-retirement long-term diversified portfolio, I think international stocks should have something like 10-15% of your dollars. Yet investors have a fear of international stocks.
There’s the impression that other countries’ stocks somehow aren’t as safe from a regulatory perspective as they are in the United States. There’s also fear that the way a given country is ruled or operates adds risk. There’s the fear that a given country’s culture is so different from ours that it’s impossible to evaluate how a security might behave.
Some of these fears have merit. I would be particularly cautious investing in places like Africa or Russia, where corruption is rampant. Otherwise, business is business wherever you go, and you shouldn’t fear companies just because they are in other countries.
International exposure is vital, primarily for diversification purposes. However, it is also important to give you exposure to the very things you may be afraid of. Different cultures consume goods and services in different ways, and you want to buy into that. Economies operate differently. You don’t want all your eggs in the domestic basket.
Here are three stocks you have likely heard of, which may ease your fears. Plus, they pay dividends.
International Stock No. 1: Unilever (UL)
Unilever (UL) is a truly global company offering personal care, food, drinks and home care products in all the major continents. They own brands you know well and probably use regularly, including: Axe, Ben & Jerry’s, Dove, Hellmann’s, Knorr, Kipton, Pond’s, signal, St. Ives, Sunsilk, Surf, and Vaseline. See? Not so scary now, even though the company is based in the UK.
The company reported solid earnings, with operating profit up 13%, and margins at 14%. This comes on stable sales growth of 3.7%, including 6.6% in emerging markets. It remains a free cash flow monster, generating $758 million of it in the first half of this years.
UL stock is just off its 52-week high and pays a 3.4% yield. It is worthy of consideration.
International Stock No. 2: GlaxoSmithKline plc (GSK)
Surely there’s no reason to fear GlaxoSmithKline plc (GSK)? This is also a UK-based company and you are no doubt familiar with the fact that it is a massive pharmaceutical company. Not only does the company develop prescription-based meds, it also creates OTC meds and consumer products.
It created NicoDerm and other tobacco addiction treatment. You are likely familiar with its dental products like Sensodyne, Polident, and Poligrip. It has some 40 products in the pipeline, and even if some strike out, more than a few will do well, and odds are that one blockbuster is in there.
What I love about GSK stock is that, even during period where earnings struggle, the company keeps on trucking with a big cash position and continually increasing dividend payments. It now pays 4.7%.
International Stock No. 3: Barclay’s (BCS)
Barclay’s (BCS) is a banking name you certainly know. Although net income for the first half of the year was down 14% YOY, it still came in at $2.9 billion. Personal and corporate banking, however, was up 23% to $2.4 billion. That’s why I’m not concerned about the bank as others are, given that the bulk of the bank’s earnings come from this sector. The offset was in investment banking, which fell by almost half. Meanwhile, its credit card division saw a a 24% increase.
These are numbers I’m perfectly happy with, and a bank with $2.2 trillion in assets isn’t going under. But for those who are concerned, don’t buy the common stock, buy the preferred A shares. They provide additional security, trade in a tight range, and yield 6.9%.
Why Warren Buffett keeps his money outside the U.S.
There’s never been a more forthright or upstanding investor than Warren Buffett, but even he hates taxes. That’s why the Berkshire Hathaway CEO keeps his personal fortune (over $600 million) in an offshore account… on an island paradise that offers the best retirement benefits. Here, the government doesn’t tax dividends or even capital gains. The result is, investors with money here earn more on average than investing in the U.S. alone. Best of all, this billionaire’s secret retirement haven is now OPEN to individual investors. You can join Warren Buffett today… right through your brokerage account – without ever leaving home. Click here to find out how.