Published:
December 31, 2007
Imagine going to a supermarket and
shopping in just half of the aisles,
or opening a restaurant menu and
limiting your dinner choices to the
entrees listed on just one of the
pages.
This is essentially what investors with no foreign exposure are doing
with their portfolios.
In years past, most of the world's stock market capitalization was
locked up in the United States. However, trillions of dollars in market
wealth has been created overseas in the past decade, and there are now
actually more opportunities outside our borders than within.
Take banks, for example. In terms of assets, seven of the top ten banks
in the world are foreign-based companies. And the story is similar
across most other industries, from retailers to steel makers to
electronics manufacturers -- many future industry bellwethers are
located outside the U.S.
And aside from a greatly expanded pool of investment ideas, there are
several other reasons to consider foreign investments. Most importantly,
stock prices are heavily influenced by economic expansion and overall
corporate profitability. And as the world's largest economy (with a
gross domestic product (GDP) in excess of $13 trillion), it is virtually
impossible for the U.S. to deliver the robust growth rates that it has
posted in decades past.
 Fortunately, many other countries around the world are at far earlier
stages on the economic development path and should see much higher
growth rates than the United States for years to come. As you can see
from our chart, while the U.S. economy is still dominant, it simply
can't match the growth that is taking place in markets like China and
India.
Considering the link between economic expansion and equity prices, it's
not surprising that U.S. stocks have struggled to keep pace with the
rest of the world.
From September 2002 to September 2007, the S&P 500 delivered average
gains of about +12% per year. While that return is certainly
respectable, it lagged most foreign benchmarks -- stocks jumped nearly
+20% per year in Europe, +25% in Pacific Asia, and +40% in Latin America
over the same time frame.
Clearly, there is something to be said for casting a wider net, and
investors who have done so have been well-rewarded. Over the past 15
years, the benchmark S&P 500 has not once been the top-performing stock
market worldwide in any given calendar year. In 2006, for example, it
failed to even break the top ten -- the +14% return of the S&P 500
wasn't even within shouting distance of, say, Venezuela's impressive
+156% surge.
Dividends Play a Leading Role
Of course, it goes without saying that in many developed markets
overseas -- just like in the United States -- a large percentage of
those total returns are comprised of dividends. In fact, those who
invest in foreign stocks will find that yields throughout Europe and in
many other regions are actually far superior to those typically seen
here.
According to Jill Evans, manager of the Alpine Dynamic Dividend Fund (ADVDX),
average yields on foreign exchanges are currently running about double
the meager average payout of roughly 2% among S&P 500 firms -- and
fatter quarterly paychecks are just the beginning.
Whether it's Brazil, Hong Kong, or Turkey, dividends send the same
message in any language. Specifically, recurring dividends represent
millions (or even billions) in annual payments to shareholders. And
companies that can meet that obligation in both good times and bad can
usually be counted on to deliver consistent cash flows.
Furthermore, dividends can also act as a built-in safety net in a
falling market. As the price of a stock drops, its yield rises --
thereby attracting investors. This tends to prop up dividend payers in a
down market and can even set a floor on the share price.
Simply put: dividend-paying stocks can usually be trusted to deliver
above-average long-term returns with less volatility than the broader
market. According to renowned professor and market researcher Jeremy
Siegel, the top 100 highest-yielding stocks in the S&P 500 have returned
+3% more per year on average than the index as a whole.
And if dividends can make that much of a difference in our low-yield
domestic environment, imagine what the generous 6%, 10% . . . even 15%
yields commonly found overseas can do for your portfolio. These are
exactly the types of stable, high-yielding foreign companies we'll
introduce our readers to every month in
High-Yield
International.
It will be the only publication of its kind dedicated exclusively to
finding high-yielding securities in foreign markets. Our mission will be
to show our subscribers how they can earn steady yields of 8% . . . 10%
. . . even 15% or more by investing in these foreign millionaire makers.
And we've prepared a complimentary special report to give you a taste of
our new international income-investing service --
High-Yield
International. Read it today and we'll reserve your spot on
our "V.I.P. List," giving you the opportunity to save an additional $100
off the already discounted charter rate. Only V.I.P. members will be
entitled to this discount, so make sure you're on this list!
Visit this
link to join the High-Yield International V.I.P. List and
get your complimentary report.
Nick Lanyi
Editor
High-Yield International
About High-Yield International
High-Yield International is
a monthly investment newsletter focused on bringing subscribers the
highest-yield securities in the world. By focusing solely on those securities
trading outside of the United States, this newsletter offers a host of relatively
unknown investment options that you probably won't find coverage of anywhere
else.
Many of these securities provide investors with annual dividend yields of 10%,
15%, even 20% or more, while also outperforming the major U.S. averages.
About Nick Lanyi[includes/bios/lanyi.htm]
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