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Australia: The
Little-Known Haven for Income Investors |
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Published:
January 15, 2008
Australia is a conundrum to most
Americans. We feel a connection to the English-speaking,
individualistic and informal Australians, and to their sprawling
country, with its modern coastal cities and rugged,
sparsely-populated frontier. But most Americans know little
about Australia's financial markets and rarely think to invest
in them.
What's So Great about Australia?
Australia has a lot to offer investors. For one thing, it's an
economic center for the Pacific Rim, particularly Southeast
Asia--one of the most vibrant and fastest-growing economic
regions on Earth. About 60% of Australia's exports go to Asia,
so its economy is less vulnerable to slowing economic growth in
the U.S. than many others around the world.
Australia is also rich in natural resources -- including raw
materials such as copper, nickel, and zinc, and agricultural
commodities such as wheat. With inflation picking up in the U.S.
and elsewhere around the world, shares of companies that own or
produce agricultural or industrial commodities could be among
the world's top performers.
Another plus: the Australian dollar has been rising versus the
U.S. dollar, boosting the value of Australian investments held
by Americans. In 2007, the Aussie dollar rose +10.9% vs. the
U.S. dollar. So an investment with a pre-currency total return
of 10% would actually have delivered an effective total return
of +20.9% thanks to the currency boost.
Encompassing an entire island continent, Australia could be
crippled by dependence on far-away energy sources to fuel its
growing economy -- but it isn't. Fortunately for the Aussies,
they're sitting on one of the world's largest supplies of
natural gas. It's enough to supply their energy needs for the
rest of this century. So while the U.S., Europe and Japan
struggle to keep up with rising oil prices in a world in which
demand is rising while supplies are falling, Australia will have
a competitive advantage in the years to come.
How Can Australia Benefit My Portfolio?
Now is a particularly auspicious time for Australian stocks. The
economy is growing robustly and has significantly stronger GDP
growth than in the U.S., Europe, or Japan. Unemployment is low,
and inflation seems under control. And income investors are
particularly well-served because Australian companies tend to
pay enticing dividend yields and there are plenty from which to
choose.
Fortunately, Australian stocks are easily purchased by U.S.
investors. Some trade in the U.S. in the form of American
Depository Receipts (ADRs). Meanwhile, others trade only on the
Australian Stock Exchange. When it comes to these securities,
the good news is that every Australian stock can be bought by a
U.S. investor with an account at Interactive Brokers or
NobleTrading or full-service broker Euro Pacific Capital. The
only problem? It's difficult -- and extremely time-consuming --
to
locate, identify, and research Australian companies. For 95% of
foreign companies, in-depth research and information simply
isn't available to U.S. investors.
That's where Nick Lanyi and his
High-Yield
International newsletter come in. Nick recently joined forces
with the experienced research staff at StreetAuthority in
a quest to bring the entire world of high-yield securities to
you. Nick's newsletter is designed to bring you several fresh
investment ideas each and every month -- such as the three
powerhouse Australian stocks in the January issue -- one of which
yields a whopping 13%. To learn the names of these stocks and to
learn more about
High-Yield International, please
visit this
link. |
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