Emerging Market Plays Domiciled in the US

By Ben Stern
www.moneymorning.com

If you're looking for ways to profit from soaring emerging market growth, you don't have to go overseas. Some of the best investments to play emerging economies are in the United States. Investors need exposure to emerging market growth, as U.S. GDP grew a paltry 2.2% last year, ranking 137th worldwide. The prospects for this year don't look much better.

By contrast, economies in countries in emerging markets in Asia, Africa and Latin America are growing three to four times faster than the U.S.

Panama's 2012 GDP growth was 8.5%; China, 7.8%; Ghana and several other African nations, close to 8%; Indonesia, 6%; and India, 5.4%.

And some of our favorite U.S. companies have huge percentages of their revenue coming from economies that grow at three to five times the rate of the United States.

Money Morning Chief Investment Strategist Keith Fitz-Gerald has consistently recommended U.S. companies with a healthy global presence.   The best of these companies, Fitz-Gerald says, have great management, pay dividends and offer products and services the world needs instead of merely wants.

"Global companies are great places to hang out if the rally continues and super places to be if things turn defensive," Fitz-Gerald said. "That's because history shows the markets treat them far better than their non-global, non-dividend-paying brethren when the stuff hits the proverbial fan."

Here are some of the best investments among U.S.-based companies operating in emerging markets.

Best Investments: U.S. Companies with Strong Global Growth

Colgate-Palmolive Co. (NYSE: CL): Colgate derives 78% of its revenue outside the United States. Latin America, its biggest market, accounts for 29% of sales; Europe and the South Pacific, 20%; Greater Asia and Africa, 20%; and North America, 18%. Besides its namesake Colgate toothpaste and Palmolive soap, the New York City-based consumer products maker has several other brands, including Irish Spring, Fresh Start detergent and a variety of pet nutrition products. CL currently yields 2.3%

Exxon Mobil Corp. (NYSE: XOM): As the world's largest oil and gas company, Exxon will profit as more emerging markets become developed. That process will require a massive influx of energy in those regions and the Irving, TX-based company is poised to profit from the transitions. Non-U.S. revenue accounts for 67% of the company's total sales. Europe, Canada, Japan, Singapore and Australia comprise its biggest markets outside the U.S. XOM currently yields 2.55%.

McDonald's Corp. (NYSE: MCD): With more than 33,000 restaurants in 119 countries, the Oak Brook, IL-based company is now the second largest fast-food restaurant in the world by stores, behind Subway, but remains first in revenue. McDonald's generates less than one-third of its sales in the United States. Europe accounts for the most, with almost 40%, and 23% of sales come from the Asia-Pacific, the Middle East and Africa regions combined.

3M Co. (NYSE: MMM): The maker of Scotch Tape and Post-it notes also makes healthcare, electronic, industrial, telecom and other consumer products. Based in St, Paul, MN, 3M generates 65% of its revenue outside the U.S. More than 30% of sales come from the Asia-Pacific, 22.5% from Europe and the Middle East, and almost 12% from Latin America and Canada. MMM currently yields 2.4%.

Pfizer Inc. (NYSE: PFE): Pfizer is a great way to invest in emerging markets, as well as a solid healthcare play. Pfizer, based in New York City, derives over 61% of its revenue outside the U.S., 20% of that in emerging markets. PFE currently yields 3.3%.

Money Morning's Keith Fitz-Gerald has been following the global growth story for years, picking the next best investments to profit from this trend. And he's delivered our Money Map Report subscribers some huge winners this year - like the world's best "sin" stock that's up over 100% since his recommendation. To learn how you can hear about all of Keith's picks - and to avoid missing the next triple-digit gains - click here.

Source: http://moneymorning.com/2013/04/05/the-best-investments-to-play-emerging-market-growth-may-surprise-you

Equities Update: Wednesday, October 10th 2012

Remember back when I said we would likely see 13,000 again on the Dow? Well, this may be that time. Even if we don't see 13,000 directly, there is likely to be a lot of volatility in individual stocks as we proceed through earnings season. This should translate into some great buying opportunities.

Keep your stink bids in.

Right now, the Dow Trans has refused to break support at 4,847 (on the daily charts) or 4873 on the weekly charts. Because this ain't happening, I suspect that insiders have some clue that profits are on the way. We'll see. If the Trans holds support going forward, watch for the correction in the Dow to be muted as well. If the Trans breaks support, there's a good chance the Dow will take a harder correction. It doesn't matter why, it just matters that it will happen one way or the other eventually.

The one thing that can turn the markets around is the Fed announcing this month's bond purchases. Although, this may simply fuel the irrational bond market bull. You know the old saying ... the markets can stay irrational longer than you can stay liquid. So through all of this, don't fight the Fed by making contrarian bets just yet. That time will come, but that time is not yet. In fact, it may be time to buy a bond or two if you rely on income. Also, dividend paying stocks are the most likely to a) not correct as hard and b) follow counter trends during market weakness. Keep that in mind as well, but don't go chasing waterfalls here folks.

A Primer on Dividend-Paying Stocks (NYSE:PG, NYSE:NWN, NYSE:EMR, NASDAQ:CINF)

from Money Morning by Diane Alter
08/30/2012

AOL Inc. (NYSE: AOL) announced Monday it would divvy out $1.1 billion in cash to shareholders, joining the growing group of dividend-paying stocks - although only for brief moment.

AOL will dole out a one-time payment of $5.15 a share to holders of record Dec. 5, for a total of $500 million given out in dividends.

In addition to the whopping and unexpected dividend news, AOL also reported a $600 million fast-tracked share repurchase agreement with Barclays Plc (NYSE ADR: BCS).

The move comes on the heels of a deal inked in April to sell 800 patents to Microsoft Corp. (Nasdaq: MSFT). At the time, AOL assured its plans were "to return a significant portion of the sale proceeds to shareholders."

The move also follows a push from activist shareholder group Starboard Value LP, which had been lobbying for AOL to unload its patent cache and reward shareholders with a dividend and share repurchase program.

Investors applauded the dividend news, sending shares of AOL up more than 3% Monday. The stock has been on a tear, climbing more than 120% year-to-date. While AOL has only planned a one-time dividend, many other companies in 2012 have announced regular payouts.

Dividend-Paying Stocks: Payouts on the Rise

A number of companies are beginning to recognize just how important dividends have become in this era of low-interest savings accounts and certificates of deposits (CDs) that offer paltry yields. In fact, dividends, once a trademark of stodgy blue chip companies, are emerging in full force in the tech sector.

Fisher Communications (Nasdaq: FSCI) made waves Monday after the company's board approved a special dividend of $10 a share payable on Oct. 19. In addition, starting in the fourth quarter of 2012, the company will shell out regular quarterly dividend payments of 15 cents a share.

Cisco Systems Inc. (Nasdaq: CSCO), one of the Internet darlings of the dot.com heyday, started paying a dividend in April 2011 and just two weeks ago nearly doubled its disbursement. The leading provider of IP-based networking announced on Aug. 15 it was raising its dividend from 8 cents a share to 14 cents. Now sporting a 3.2% dividend yield and still sitting on a pile of cash, the payout ratio suggests Cisco can continue to raise its dividend.

Forbes wrote that the move is another sign that tech companies are morphing into the new industrials. In fact, Forbes asked if Cisco, with its rich yield, could now be as reliable as an electricity stock (a group long revered for healthy dividends).

Apple Inc. (Nasdaq: AAPL), enjoying explosive growth with its iPads, iPods, iPhones and iTunes Store, in March initiated a quarterly dividend of $2.65 per share which was paid out in its fourth quarter of fiscal 2012. It also announced a share buyback program to the tune of $10 billion.

Tech isn't the only sector rewarding its shareholders with cash.

Tobacco giant Altria Group Inc. (NYSE: MO), valued for its attractive and often increased dividend, hiked its dividend payout 7.3% to 44 cents a share last week, for a yield of 4.8%. Offshore drilling behemoth SeaDrill Ltd. (Nasdaq: SDRL) also just increased its dividend by 2 cents to a rich 84 cents a share. And Brinker International Inc. (NYSE: EAT), the parent company of Chili's, Maggiano's and Macaroni Grill, also just announced it was boosting its dividend payout 25%, and it too will initiate a stock repurchase plan.

Diversify With Dividend Stocks

Before diving in to dividend-paying stocks, investors need to do their research. Investing for yield takes some planning.

To be properly diversified, income investors need to look across a broad spectrum.

Money Morning Global Investing Strategist Martin Hutchinson said that in addition to the robust payouts from real estate investment trusts (REITs), master limited partnerships (MLPs), financials and shipping, investors should dot their portfolios with tech stocks like the ones listed above.

Hutchinson also comprised a list of dividend stocks that have survived every recession since 1962, are expected to survive the next one (which looks increasingly more likely), and have not only maintained but raised their dividends for over half a century.

"For investors, that's the true sign of a recession-proof stock," said Hutchinson. "These types of stocks represent the ultimate safe haven for your money. Their share price and even earnings may decline, but their dividends should continue to increase."

Hutchinson's dividend stock winners include:

• The Procter and Gamble Co. (NYSE: PG), the household conglomerate that has increased dividends every year since 1954. Its dividend yield is 3.7%.

• Northwest Natural Gas Co. (NYSE: NWN) has raised its dividend every year since 1956. The company, which stores and distributes natural gas in Oregon, Washington and California, boasts a 3.7% dividend yield.

• Emerson Electric Co. (NYSE: EMR) has increased its dividend yearly since 1957. This global engineering services and solutions company rewards shareholders with a 3.5% dividend yield.

• Cincinnati Financial Corp. (Nasdaq: CINF) has boosted its dividend every year since 1961. The property and casualty insurance stock carries a yield of 4.2%.

Source: Dividend-Paying Stocks: AOL Not the Only One to Raise Payout:

Recession 2013: Prepare Your Portfolio with These Rock-Solid Dividend Payers

JULY 9, 2012BY MARTIN HUTCHINSON, Global Investing Strategist, Money Morning

Successful investing is a bit like connecting the dots. Put enough of them together and they begin to form a picture. Unfortunately, today's dots are pointing towards a recession. With first-quarter GDP growth under 2% and a whole host of indicators moving in the wrong direction, it looks as though the U.S. economy has stalled. That leaves income investors like us faced with a very important question: how do we best protect our portfolios from the stock price declines and dividend cuts that a recession would bring?

One simple answer is to invest in those countries that are not suffering recession. That opens up a world of possibilities.  For instance, you might consider investing in Japan, which grew at over 4% in the first quarter. Orix Corporation (NYSE: IX) is a name I like. 

Or better yet you could invest in emerging markets where growth continues to sizzle. 

That makes stocks like the Aberdeen Chile Fund (NYSE: CH) a good buy-especially considering the fund offers a dividend yield over 10%. The fund is attractive to me for two reasons. First, it's becuse Chile is a well-run country, standing higher than the U.S. on several international business surveys. But more importantly, its dependence on copper and other commodities is not a problem unless the global economy as a whole goes into recession, which I don't expect.

With assets in primarily Chilean securities, the fund also offers investors a nice measure of diversification from the U.S. economy, since they can expect Chile to keep on growing-- even if the U.S. economy takes a step backwards. 

But that doesn't mean you need to avoid the U.S. altogether, either. 

In fact, there is a key indicator I'll discuss in a moment which will allow you to preserve your income and the value of your investments through all but the deepest recessions. First though, you'll need to avoid a few pitfalls. As always, it's never just a matter of picking the stocks with the highest dividend yield. It's just not that simple.

In fact, a number of the highest dividend-paying companies like American Capital Agency (Nasdaq: AGNC) have dividends that depend on financial game-playing--- borrowing in the short-term markets and investing in long-term housing agency debt. 

While the income stream from the agency bonds will remain solid in a recession (because it is effectively government guaranteed) entrusting much of one's wealth to this kind of scheme is foolish. 

Meanwhile, other high-paying dividend companies have overleveraged balance sheets. 

B&G Foods (NYSE: BGS), for example, has an excellent recession-proof business in managing brands of shelf-stable foods such as Cream of Wheat and Grandma's Molasses - products whose sales generally suffer little in a recession. At its current elevated share price of around $26 it still has a dividend yield of around 4%. 

However, its balance sheet has a 4:1 debt/equity ratio, and excluding intangible assets it has a negative net worth. 

BGS also suffered badly in 2008-09, with the share price dropping below $3. This could easily happen again if bank facilities became tight.

The True Sign of Recession-Proof Stocks

However, at the other end of the spectrum, there are some dividend aristocrats which have not only maintained but increased their dividends for over half a century. 

Having survived every recession since 1962, they can be expected to survive the next one, and indeed to continue increasing their dividend. 

For investors, that's the true sign of a recession-proof stock.

As a result, these types of stocks represent the ultimate safe haven for your money. Their share price and even earnings may decline, but their dividends should continue to increase. 

There are 10 such companies, four of which have a current dividend yield of 3.5% or more - giving you a pretty good yield at a time when even 30-year Treasury bonds yield only 2.7%. 

They include: 

• Procter and Gamble Co. (NYSE: PG) has increased dividends every year since 1954. This huge household goods company pays a dividend yield of 3.7%;
• Northwest Natural Gas (NYSE: NWN) has increased dividends every year since 1956. With a dividend yield of 3.7%, the company stores and distributes natural gas in Oregon, Washington and California;
• Emerson Electric (NYSE: EMR) has increased dividends every year since 1957. This worldwide engineering services and solutions company pays a dividend yield of 3.5%;
• Cincinnati Financial Corp. (Nasdaq: CINF) has increased dividends every year since 1961. The property and casualty insurance company pays a dividend yield of 4.2%.

Here's the best part: with those four you even get the diversification of four different sectors along with the ultimate dividend-producing, sleep-at-night investments. 

So you see sometimes, investing can be easy---even in the face of a recession. 

Good Investing, 

The Best of the Best Dividend-Paying Stocks

June 21st, 2012
By by Ben Gersten
moneymorning.com

Over the past few years there have been unprecedented swings in the major indexes, scaring some investors out of the markets altogether. What people don't realize is that successful investing is a matter of continuous performance, not instantaneous performance.


That's why we like dividend-paying stocks. Over time, dividends and reinvestment can account for 85%-90% of total stock market returns. In some cases, the dividends are so steady and increase so much that you actually make more in dividends than you paid to buy the stocks that produce them. But before you go hunting for the best dividend-paying stocks, let's set some ground rules for evaluating which ones are most valuable.

First, a good cutoff is a stock with 3% yield or more, and a payout ratio less than 60%. Any higher payout ratio would indicate that the company cannot sustain the dividends, manage debt and grow at the same time. Second, look for companies that have price/earnings ratios of less than 25 and a solid history of paying dividends. This establishes a solid benchmark for dividend stocks and their fundamentals. Sometimes a dividend stock can look great because it has a 10% yield, but you have to look at the other numbers to decide if it's a worthy investment. With that said here are some of the best dividend-paying stocks out there right now.

The Best Dividend-Paying Stocks

Best of the Dow- Chevron Corp. (NYSE: CVX): While AT&T Inc. (NYSE: T) has the highest yield in the Dow, its payout ratio is over 200%, immediately dropping it from our list. Chevron sports a dividend yield of 3.5% with a very nice 26% payout ratio. The one-year target price for Chevron is $124, almost a 20% premium from the current $103.45 share price. Chevron has increased its dividend for 24 consecutive years. If it keeps that streak up next year it will join the elite Standard & Poor's "Dividend Aristocrat" list of companies that have raised dividends for 25 straight years.


Best Energy - ConocoPhilips (NYSE: COP): While many dividend-paying energy stocks have yields above 9% or 10%, many also have unsustainable payout ratios. ConocoPhillips is an exception and makes the list with a 4.8% yield and a low 29% payout ratio. On May 1 ConocoPhillips split into two companies, ConocoPhillips and Phillips 66. This spin off should create a lot of potential growth for Conoco. The one-year target price is 18% above its recent stock price of $54.40.


Best Tech - Intel Corp. (Nasdaq: INTC): Since Apple Inc. (Nasdaq: AAPL) has not yet issued its dividend and cannot qualify for the list I decided to go with Intel as the leading tech dividend-paying stock. Intel currently offers a 3.2% yield and has a payout ratio just above 35%. In a sector that doesn't have a lot of dividend-paying companies, Intel stands out with its dividend history. Over the past 20 years Intel has increased its annual dividend 18 times. Intel is up 14% in 2012 and has a target price of $30, a 9% premium from its current price to go along with its dividend yield.


Best Recession Proof - General Mills Inc. (NYSE: GIS): What could be more recession proof than cereal? Well, maybe one or two things are, but almost everyone loves cereal and General Mills makes practically all the cereal anyone eats. If rough economic times continue, look to General Mills for stability. It boasts a 3.2% yield, 52% payout ratio and an average target price of $42.65, up over 10% from its current price. But what makes this such a recession-proof stock is its ultra-low beta of 0.1 - you can't beat that.


Best Global - ABB Ltd (NYSE ADR: ABB): ABB, an innovating company based in Switzerland, is a global leader in power and automation technologies that narrowly beat out Siemens AG (NYSE: ADR: SI) for the best global dividend-paying stock. ABB sports a healthy 4.3% yield with a manageable payout ratio of 50%. The stock has been hurt over the past year due to the Eurozone debt crisis, but analysts have a target price for the next twelve months of $25.50, a 55% premium from its current price.


Best ETF- SPDR S&P Dividend ETF (NYSEARCA: SDY): This fund tracks the S&P High-Yield Dividend Aristocrats Index. It holds 60 companies from the S&P 1500 Index that have lifted their dividends at least 25 straight years. Most are high quality large-cap stocks that trade at reasonable prices. The fund offers a 3.2% yield.

There are many exchange-traded dividend funds as well as mutual funds that offer a similar investment. If you are interested in these just make sure to check their major holdings, risk, expense ratios, yields and returns to make an educated judgment.

One final thought: The opportunity in these investments is perfect for this market environment. With some stocks at cheap prices, now's the perfect time to consider these dividend-paying stocks and dividend funds.

Source: The Best of the Best Dividend-Paying Stocks:

Dividend Paying Stocks and ETFs

How to pick a Winning Dividend Stock

March 22, 2012

By Don Miller, Contributing Writer, Money Morning
http://moneymorning.com/2012/03/22/how-to-pick-winning-dividend-stocks/

Discussed in these articles are: McDonald's Corp. (NYSE: MCD), Wal-Mart Stores Inc. (NYSE: WMT), WisdomTree Emerging Markets High Yielding Equity ETF (NYSE: DEM), SPDR S&P International Dividend ETF (NYSEArca: DWX), BHP Billiton Ltd. (NYSE ADR: BBL):Diageo plc (NYSE: DEO): Enbridge Inc. (NYSE: ENB).

Do you need more income? Join the crowd. It seems everyone is scouring the landscape these days for decent income investments to beef up their monthly take-home - especially now with the price of gas and other everyday items skyrocketing. But it's not too late to find great dividend stocks. You can still get cold, hard cash on a regular basis by investing in companies that reward loyal investors with substantial dividends. In fact, if dividend-paying stocks aren't a major part of your portfolio, the odds of being successful in the markets are stacked against you.

Need proof? An exhaustive study of stock market returns from 1871 through 2003 showed that over a 135-year period owning stocks and reinvesting the dividends produced 97% of all stock market returns. Meanwhile a paltry 3% was produced by capital gains. Dividend stocks are safer too. The very same qualities that allow companies to pay steady dividends means they're much less vulnerable to broad market drops than your typical stock. And right now corporate America is willing to pay even more in dividends. Companies are on pace to pay a record $263 billion in dividends to shareholders over the next year even though the S&P 500 Index is still more than 10% below its peak, according to S&P Capital IQ reports. "We're seeing good dividend increases across the board," Richard Helm of Cohen & Steers Dividend Value fund told USA Today.

Buying Great Dividend Stocks

It's no secret - a company's dividends play a major role in their performance. Yet many investors completely ignore this important fact. But you can't just plunk your money down on any old dividend stock.

You see, most people get "income investing" all wrong. They either settle for dividends that are much too low and never grow a penny or they take on way too much risk. But you can always do better than that if you know what to look for.  Here are three keys to help you identify a great dividend stock...

#1 - Check the Payout Ratio

Some companies may seem to be humming right along, but the truth is they're consistently paying out more in dividends than they take in. After a few years of this, the cash runs out and they have to cut or eliminate the dividend...or worse. The payout ratio (P/R) helps you sort the wheat from the chaff. A low payout ratio means a company has enough cash to pay off debt, with money left over to invest in growing the business. 

To calculate the payout ratio simply divide the annual dividend by earnings per share. If a company pays an annual dividend of $1 per share and earns $2 per share, the payout ratio would be 50%. Conversely, a dividend of $4 a share with the same earnings would have an unsustainable P/R of 200%. In general, stocks with a payout ratio under 60% provide an adequate margin of safety, but as always your personal risk tolerance should be the determining factor.

#2 - Find Companies with Growing Dividends

If a company is truly a great investment, profits should be going up, cash should be going up and dividends should also be going up. But truly savvy income investors focus on companies that raise distributions every year.  And the very best companies have consistently raised dividends for long periods of time.

Typically these businesses have wide moats and strong brands. Companies like McDonald's Corp. (NYSE: MCD) and Wal-Mart Stores Inc. (NYSE: WMT) (Gold Avalanche note: consider this article on Wal-mart) are able to raise their dividends over time because they can pass cost increases on to consumers and keep profit margins growing. Look for companies that have been increasing their dividend for at least five years. These companies should do well during inflationary times and the rising dividend will also help investors keep their purchasing power growing as well.

#3 - Calculate the Return on Investment

When you make an investment you should always know what your return is. You can project your return on investment (ROI) by adding the dividend to the increase in a stock's price and dividing it by your original investment. Say you buy a stock for $10 a share that pays 40 cents a share in annual dividends. The stock goes up $1 per share the next year, giving you a profit of $1.40. Divide that by your original investment of $10 and you have an ROI of 14%. Look for dividend stocks that have consistently beaten the returns on the S&P 500 Index. The extra margin of safety built in to dividend stocks also exposes you to less risk.  With income hard to come by, dividend stocks are a wise investment choice for any portfolio. But as always you need to do your due diligence to tailor them to your own unique needs.

Emerging Market Dividend Stocks Give Investors the Best of Both Worlds

February 16, 2012

By Martin Hutchinson, Global Investing Strategist, Money Morning
http://moneymorning.com/2012/02/16/emerging-market-dividend-stocks-give-investors-the-best-of-both-worlds/

Here Gold Avalanche, we see an opportunity developing in Emerging markets, so we want to keep our eye on some of the most visible and widely accessible plays available.Below are some well researched articles to help you on your way. Remember that nothing here should be considered personal investment advice, so talk to your adviser before making any investment decisions.

In today's market, dividend investing is the best way to achieve a decent income stream without taking on too much risk.On the other hand, this is also true: emerging markets give investors the benefit of the world's fastest economic growth. Investors would be wise then to combine these two strategies by buying emerging markets stocks that pay steady dividends.

In practice, this is more difficult than it ought to be - but it's not impossible. In fact, as you'll learn later I have found numerous ways to profit from this best of both worlds strategy.

What You Need to Know About Emerging Market Dividend Stocks

Dividend-paying stocks in emerging markets have the same advantages as they do in the U.S. market.
Just like here in The States, a sizeable dividend from overseas is not only money in your pocket, it's also evidence that the management is working in your interests as a shareholder. And by paying dividends investors can be sure that at least some of the earnings the company is generating are real and not the result of an accounting flim-flam.

If a company in a fast-growing emerging market is able to pay a decent dividend and participate in local growth, then you can anticipate very good returns indeed, since the dividend itself is likely to grow on the back of the company's rapidly increasing profits. Of course, there are always risks in emerging market investing, but a good yield gives your holding a solidity that isn't present in companies with mere paper earnings.

But here's what you need to know...

Most countries impose a withholding tax of 20% or so on the dividends paid to U.S. recipients before you receive them. In a taxable account, these foreign withholding taxes often (but not always) give you a credit against your payable U.S. taxes. In a tax-free retirement account, which is the most sensible place for most investments, there is no U.S. tax against which the withholding tax can be offset, and so the yield to you is correspondingly reduced.

How to Choose the Right Emerging Market Dividend Stocks

Another problem with investing in emerging market dividend payers is that many of them, particularly those located in countries where bank finance is expensive, prefer to retain earnings and thereby reduce bank debt rather than pay dividends. The Brazilian Petrobras (NYSE: PBR), for example, pays out only 5% of its earnings in dividends, giving investors a yield of only 0.5%. Another example is America Movil (NYSE: AMX). The Mexican mobile telecom company is the basis for Carlos Slim's world-leading fortune. America Movil pays out only one sixth of its earnings and yields just 1.1%. Conversely, in Taiwan, companies gain tax benefits by paying out 80% of their earnings in dividends. As a result, some Taiwanese companies have high dividend yields, although the really juicy ones tend to occur when the semiconductor cycle is favorable, which it currently is not. Still, even at a mere 2.9% yield, Taiwan Semiconductor (NYSE: TSM) is worth considering.

Two Ways to Create an Emerging Market Income Stream

Since many of the better paying companies are not listed on U.S. exchanges, the most efficient way to buy emerging market dividend stocks is through a fund.

The largest and most solid of these is the WisdomTree Emerging Markets High Yielding Equity ETF (NYSE: DEM). This fund has total assets of a chunky $2.7 billion and an expense ratio of 0.63%. It also has an attractive yield of 4.12%, which is highly competitive with even the longest-term Treasury or agency bonds. The fund's P/E ratio is a modest 11 times earnings. The fund has 280 holdings with a good range of emerging market exposure - 21% in Brazil, 20% in Taiwan, 9% in South Africa, 8% in Malaysia, and 5% in Chile. In terms of sector exposure, finance represents 27% of the fund. But not to worry -- this is less of a problem in emerging markets, where the follies of Western banking are only mildly apparent! Other industries include telecoms at 20% of the fund, IT at 13%, and materials and utilities each at 10%.

Alternatively, if you're feeling adventurous and looking for high-yielding exotica, try Kumba Iron Ore (PINK: KUMBF). It's one of the largest companies you've never heard of. Kumba has a market capitalization of $23 billion, and is the iron ore mining subsidiary of Anglo American, the well-known South African mining group. The company just reported a 19% jump in 2011 earnings. Yet the stock is trading at only 10.6 times trailing earnings, with earnings per share (EPS) expected by analysts to increase another 10% in 2012. It has declared a final dividend of 22.50 South African Rand ($2.91 at today's exchange rate), which is expected to go ex-dividend in March. And in August 2011 it paid an interim dividend, for a total of ZAR44.20 ($5.72 approximately), a yield of 7.6% currently. With iron ore prices strong on continued Chinese growth, KUMBF looks like an interesting buy, and is not overpriced.

Either way, income investors would be wise to look into emerging market dividend stocks. They really are the best of both worlds. 
 

Foreign Market Dividend Paying Stocks

By Don Miller, Contributing Writer, Money Morning

http://moneymorning.com/2012/03/26/how-to-buy-foreign-market-dividend-stocks/

As we saw above, there are some real opportunities in Emerging markets not only for profit, but for regular income.  The same type of profit and income can also be had from simply looking beyond your own borders. In the US, this can be as close as that white wonderland to the north, Canada.

Below is an article on some of the benefits of Foreign market dividend paying stocks, along with a couple of stocks to check out. These are not personal investment recommendations, so talk to your investment broker or adviser before making any investment decisions.

Foreign Market Dividend Stocks Are Bargains

Foreign market dividend stocks share many of the same qualities of their U.S. counterparts. For the vast majority, dividends -- not capital gains -- provide the lion's share of returns. In fact, more than 80% of European returns from 1970-2010 came from a combination of yield and real dividend growth, according to Blackrock Inc. (NYSE: BLK). What's more, even in high-growth regions like Asia, about 60% of returns over the past 30 years have come from dividends and dividend growth. And with U.S. investors now barreling into domestic dividend stocks, international stocks offer another benefit-they are cheaper and less competitive.

"With much of the dividend corner of the U.S. equity market - including U.S. utility stocks in particular - now crowded and expensive, investors might want to consider looking abroad for dividend income," BlackRock market strategist Russ Koesterich told Barron's.

Top non-U.S. dividend stocks are currently priced at less than 10 times forward earnings, according to Empirical Research Partners -- the only time that's happened since the early 1990s, except for the 2008 financial crisis.

Foreign stocks are also paying out higher yields than U.S. stocks. The broad S&P 500 Index currently yields around 2% while markets in Australia, France, and Switzerland are yielding 3% to 5%. And there's another angle for investors to like - high-growth emerging economies are carrying far less debt than developed countries. It's a great way to diversify away from the shrinking American dollar and rake in potential currency gains.

What You Need to Know About Foreign Market Dividend Stocks

But you should know there are some significant differences between U.S. and international dividend stocks. The first is that most foreign companies pay out dividends as a fixed percentage of earnings each year. That means dividends are more likely to be cut in response to short-term fluctuations in profits, whereas U.S. companies are more reluctant to cut dividends if the company has a bad year. And many international companies also pay dividends only once or twice a year - far less than the monthly or quarterly dividends that Americans have grown accustomed to. Most importantly, lots of foreign countries impose a withholding tax before sending you the dividend.  Fortunately, most have treaties with the U.S. where you can claim a credit for the tax withheld, but only if you hold these stocks in a taxable account.

Four Ways to Invest in Foreign Dividend Stocks

Keeping those factors in mind, there are still plenty of great foreign market dividend stocks that will reward you with high payouts and substantial returns.
Since many high-paying companies are not listed on U.S. exchanges, a good way to minimize risk and get plenty of diversification is to invest in an exchange-traded fund (ETF).

One solid choice is the SPDR S&P International Dividend ETF (NYSEArca: DWX). This fund has total assets of over $800 million and a below-average expense ratio of 0.44%. It also sports a juicy yield of 6.49%, which is a nice payoff compared to long-term Treasury bonds. And it's cheap, carrying a forward P/E ratio of only 9.  The fund has broad exposure to various market sectors, with communication services (21%) and utilities (14%) leading the way. Best of all, the fund has returned nearly 9% year-to-date and over 90% in the last three years.

You can also choose from a bevy of quality individual stocks that trade on U.S. stock exchanges. Here are three foreign-based corporations which-- in keeping with our criteria-- have increased their dividends for at least five consecutive years and kept their payout ratio (P/R) below 60%.

They include:

BHP Billiton Ltd. (NYSE ADR: BBL): BHP is the world's largest mining company. While BHP's 2.9% yield isn't jaw-dropping, its dividend has grown by 551% over the last 10 years. The company has $16.6 billion in cash and a rock-bottom payout ratio of 21%.

Diageo plc (NYSE: DEO): DEO is one of the world's largest spirits distributing and packaging companies. DEO has increased payments to shareholders every year since 1998. The company has delivered a 5.5% annual increase in earnings per share since 2001, keeping its payout ratio under 50%.

Enbridge Inc. (NYSE: ENB): This Canadian energy company recently announced a 15% dividend increase, the 17th consecutive year of dividend growth. Its 4.26% yield equates to a 38% payout ratio.

The fact is, in today's global economy you can spice up your returns by adding some international flavor. Foreign market dividend stocks are a great place to start.

Gold dividends and the perfect set-up

BY PETER KRAUTH, Global Resources Specialist, Money Morning. www.moneymorning.com

What if I told you there was a company that paid its shareholders in physical gold? Would a "golden dividend" be enough to get you interested in gold stocks? If not gold, what about silver? Neither one of these options even existed when I first started talking about them just three months ago.

But thanks in part to billionaire resource investor Eric Sprott, today's investors can benefit from a dividend payable in physical gold or silver. Sprott had sent a letter to silver producers, suggesting they reinvest some 25% of their earnings back into silver, rather than in cash at the bank. That took my earlier discussion about gold and silver dividends to a totally new level: dividends in kind. These aren't paper profits, but real, hold-in-your-hand gold and silver dividends. For precious metals investors, these "hard asset" dividends make perfect sense. Today, one innovative gold and silver producer offers investors the best of both worlds.

Finally: Physical Gold and Silver Dividends

In a bid to gain the "first mover" advantage, Gold Resource Corp. (NYSEAmex: GORO), a low-cost gold producer, is launching a gold and silver dividend program on April 10, 2012. The company has already paid out $41 million in dividends to its shareholders over the past year and a half.

But now they are offering shareholders a unique option by partnering with Gold Bullion International (GBI). GBI is a New York-based precious metals provider to individual and institutional investors, with storage vaults in New York, Salt Lake City, London, Zurich, Singapore, and Australia. Essentially, GORO shareholders can elect to convert their cash dividends into Gold Resource Corp. "Double Eagles" consisting of one ounce 0.999 fine gold and/or one ounce 0.999 fine silver rounds. These "Double Eagles" will be drawn from GORO's physical treasury and placed into the shareholder's "individual bullion account" with GBI.

Jason Reid, President of Gold Resource Corp. said this new program is "a convenient and simple way of delivering precious metal dividends to shareholders [that] has been a long-term goal of the Company." He went on to say: "With innovative assistance from Gold Bullion International, management of Gold Resource Corporation is pleased and excited to announce the launch of the Company's gold and silver dividend program, a dividend program unlike any other known program offered of its kind." Other than the introduction of physically backed gold and silver ETFs, I can't think of another investment innovation in this sector that could have a major impact on how investors add precious metals into their portfolios. So, What's An Eager Gold Investor To Do?

Obviously, you don't have to get your physical silver and gold by investing in GORO. Instead, you could just take your dividends from a gold and/or silver producer, then go out and buy precious metals yourself. What GORO's new program does is make this whole process a lot simpler for those of its shareholders who prefer the real thing. So of course that begs the question: Should you buy into Gold Resource Corporation? Patient and early shareholders of GORO have been well rewarded with a tenfold gain since 2006. But at today's share price of $23, GORO's trading at a P/E of 22.6 - a bit rich for my taste. And despite the 2.5% dividend, which is generous by gold producer standards, you'd need to own $68,000 worth of GORO stock to receive one gold ounce annually at today's gold price.

That places Gold Resource out of reach for many.

A Golden Alternative

Investors could look instead at the Market Vectors Gold Miners ETF (NYSEArca: GDX), which mimics the Gold Bugs Index (NYSE: HUI). It is trading at a P/E of 13, though offering a negligible yield of 0.27%. This kind of valuation is near historical lows, making precious metals producers (as a group) a very compelling investment right now. That's not to say they can't get cheaper. But consider this: The very first time GDX traded at today's prices was back in October 2007.

At the time gold was trading under $800 and silver under $15. Both metals are at double those levels right now. Yet the gold and silver producers are still trading at October 2007 prices.

This can't last.

Investor sentiment toward gold is at exceptionally low levels versus the average of the past four years. But real interest rates (interest you can earn safely minus inflation) are near -3%. That has historically kept gold in a bull market. On a seasonal basis, we're also likely at the "trough," where gold stocks tend to bottom out before heading higher.

How much higher?

Well, if we look at the data from the past decade since gold started its secular bull run, the HUI has averaged 15% gains from mid-March until the end of May. And gold stocks are at an extreme "undervalued' level right now: another great contrarian signal.

The past several times we've had this kind of setup, gold stocks have absolutely soared, with the HUI Index shooting up over 100% in the ensuing twelve months. The current price range for GDX - $45 to $50 - has previously acted as both resistance and support. In my view, the inflection point is close at hand. The odds are in favor of gold stock investors.

My advice: Seriously consider going long gold stocks, which you can easily do by adding GDX.

With such great odds, you could well double your money by this time next year. In the meantime, keep your eye out for companies that follow GORO's lead and begin to offer dividends payable in gold and silver.
Even though this development has drawn little fanfare in the press, I believe it's a watershed moment in precious metals investing.

[Editor's Note: Gold and silver aren't the only way to profit in today's commodities bull market.
According to Peter, soon virtually every substance vital to modern life will become enormously expensive and profitable for investors who know how to play it.

http://moneymorning.com/2012/03/26/physical-gold-and-silver-dividends-offer-investors-the-best-of-both-worlds/