7 International Dividend Stocks for Diversification
Dividend stocks are a favorite among a range of investors for their stability and regular income payments. Don’t be fooled into believing that stocks with payouts are only of interest to your grandparents; dividend stocks help to smoothly grow your portfolio. Some funds, such as iShares International Dividend Growth ETF and the Vanguard International High Dividend Yield Fund (VYMI), can be attractive but remove the ability to self-select your stock picks. For those seeking to choose just a few income stocks, such ETFs may be unappealing. Check out this list for seven international dividend stocks for diversification.
7 International Dividend Stocks for Diversification
Rio Tinto Group (RIO)
Rio Tinto is a multinational mining firm headquartered in London. Its mining operations are always expanding into new territories, with its most technologically advanced mine, Gudai-Darri, recently opening in Perth, Australia, and an additional lithium project starting in Argentina. The company has benefited from rising commodities prices, providing a stable base for growth. Rio Tinto paid out $9.63 in dividends last year, a 25% increase from 2017, showing how the rise in commodities has benefited shareholders. The company pays a dividend yield of 12.1% at current levels.
Unilever PLC (UL)
Founded in 1929 with the merger of a soap and margarine company, Unilever now boasts over 400 consumer brands such as Ben and Jerry’s ice cream and Dove soap. Consumer goods have brought the company low volatility relative to the rest of the market. A recent investment by Trian Fund Management, an investment firm that is active in improving strategic initiatives within its holdings, could lead to substantial growth for an otherwise stagnant stock. To that same end, Unilever recently announced a 3 billion euro (about $3.16 billion) stock buyback plan over 2022 and 2023. The company has an impressive 4.4% dividend yield.
Shell PLC (SHEL)
Shell was founded 115 years ago and remains one of the world’s largest and most diversified oil companies. The company currently is selling for a relatively cheap price-earnings ratio of 9.4. The fact that it is undervalued despite energy markets outperforming the rest of the market makes it a compelling buy. Shell also boasts one of the lowest payout ratios on this list, standing at only 23.5% – meaning SHEL uses less than a quarter of its earnings to finance the dividend. The company’s dividend yield stands at 3.7%, a meaningful premium to the 3.1% offered by 10-year Treasurys at the moment.
Ambev SA (ABEV)
Ambev is a soft drink and beer producer that has been around since the 1880s. Like any drink manufacturer, the company’s revenue is driven both by the volume of drinks sold and the cost per unit. Last quarter, Ambev reported that organic net revenue grew by 18.5% despite overall volume only growing by 3.6%. Brand names like Stella Artois and Anheuser-Busch command significant market sway, and an increase in prices did not negatively affect the volume of drinks sold. In essence, Ambev was able to charge 14% more for drinks while actually increasing its sales volume. ABEV boasts a 4.3% dividend yield, and analysts expect top-line growth of 19% this year and 6% in 2023.
Sony Group Corp. (SONY)
Started as an electronics shop in Japan following WWII, Sony is now a global leader in headphone, gaming and photography technology. This places it as a keystone consumer manufacturer in many sectors, insulating the company from market turbulence. Sony reported a 10% increase in sales and a 109% increase in operating income for fiscal year 2021. And while Sony’s business operations have been negatively affected by supply chain disruptions and chip shortages, executives expect sales to remain strong as consumers price in those factors. As a result, Sony expects sales to rise 11% in the current fiscal year. Sony has a current dividend yield of 0.6%, but offers a good way to diversify your portfolio away from U.S.-based companies.
Royal Bank of Canada (RY)
RY is one of the biggest banks in Canada. The company serves 17 million clients in Canada, the U.S. and 27 other countries, which gives it a diversified revenue stream. RY has seen client activity grow substantially over the past two years, with Canadian deposits rising 23% to $113 billion. This past quarter it also reported solid results, with year-over-year revenue rising 3% and net income up 6%. As the Federal Reserve continues to raise the federal funds rate, revenue should continue to rise for RY. The company should benefit from the increased deposits it currently has when it’s able to charge higher rates for loans as rates rise. The company currently pays a dividend yield of 3.8%.
Toronto-Dominion Bank (TD)
TD has been around in Canada since 1855 and has played a key role in the industrialization of the country for the past 100-plus years. The company has a track record of expanding aggressively into American markets over the last 20 years by acquiring well-known banks such as TD Banknorth, now TD Bank. After acquiring Commerce Bancorp, TD became one of the seven largest banks by branch network in North America. In the first quarter, TD saw total deposits increase by 6% year over year, with total revenue rising 9%. With a payout ratio of just 41%, TD pays a sustainable dividend yield of 4.1%.
7 international dividend stocks for diversification:
- Rio Tinto Group (RIO)
- Unilever PLC (UL)
- Shell PLC (SHEL)
- Ambev SA (ABEV)
- Sony Group Corp. (SONY)
- Royal Bank of Canada (RY)
- Toronto-Dominion Bank (TD)