Several Latin American ADRs offer quite high dividend yields; however, the stability and consistency of that yield varies significantly over time. In this follow-up to my previous article, I look closely at the dividend yields and performance of four additional ADRs.
I found the following ADRs to offer substantial current dividend yields:
| Ticker | Name | Market Capitalization ($ Millions) | Dividend Yield | Country | Industry |
| PVD | Administradora de Fondos de Pensiones-Provida, S.A. | 1,718 | 6.9% | Chile | Financial |
| YPF | YPF Sociedad Anonima | 17,610 | 6.4% | Argentina | Oil & Gas |
| APSA | Alto Palermo S.A. | 450 | 6.3% | Argentina | Real Estate |
| BFR | BBVA Banco Frances | 2,027 | 6.0% | Argentina | Banking |
| CPL | CPFL Energia S.A. | 14,117 | 5.7% | Brazil | Utility |
| SCCO | Southern Peru Copper Corporation | 33,864 | 4.6% | Peru | Mining |
| TMX | Telefonos de Mexico - Series L | 16.750 | 4.3% | Mexico | Telecom |
| IRS | IRSA Inversiones y Representaciones | 796 | 3.8% | Argentina | Real Estate |
| BLX | Banco Latinoamericano de Comercio Exterior, S.A. | 488 | 3.8% | Panama | Banking |
| OMAB | Grupo Aeroportuario del Centro Norte | 662 | 3.7% | Mexico | Transport |
| SID | National Steel Corporation | 24,538 | 3.6% | Brazil | Steel |
| BCH | Banco De Chile | 11,887 | 3.4% | Chile | Banking |
| PAC | Grupo Aeroportuario del Pacifico | 2,037 | 3.3% | Mexico | Transport |
| ASR | Grupo Aeroportuario del Sureste | 1,640 | 3.2% | Mexico | Transport |
Data is provided by Zacks.com services. Dividend yields were reconciled against historical dividends from Yahoo!Finance if there was a discrepancy between Zacks.com and Yahoo!Finance. It should also be noted that Yahoo!Finance was used for YPF, APSA and TMX. ASR and PAC show different shares outstanding between Yahoo!Finance and Zacks.com.
The rest of this article will focus in on four ADRs: Telefonos de Mexico (TMX), Grupo Aeroportuario del Centro Norte (OMAB), Banco De Chile (BCH), and Administradora de Fondos de Pensiones-Provida, S.A. (PVD) to examine their dividend yield history.
Telefonos de Mexico (TMX) provides a broad range of telecommunications services throughout Mexico, ranging from voice to data to mobile services. TMX has a long history of 4 consistent dividend payments each year. This started in 1998. Prior to that point TMX paid three dividends in 1997 and made semi-annual payments in 1995 and 1996. Below is the history of dividends and yields. It should be noted that in June of 2008, Yahoo!Finance recorded a dividend of $17 per share. It appears that this is related to the spin-off of Telmex International from TMX. I will ignore its impact on historical yield.
| Date | Dividends (US$) | Trailing 12 Months of Dividends (US$) | Closing Stock Price (US$) | Implied Yield (%) |
| 3/21/2011 | 0.208 | 0.804 | 16.97 | 4.7% |
| 12/13/2010 | 0.197 | 0.774 | 15.89 | 4.9% |
| 9/20/2010 | 0.198 | 1.353 | 14.88 | 9.1% |
| 6/14/2010 | 0.201 | 1.326 | 14.19 | 9.3% |
| 3/23/2010 | 0.178 | 1.291 | 15.68 | 8.2% |
| 12/14/2009 | 0.776 | 1.264 | 17.64 | 7.2% |
| 9/15/2009 | 0.171 | 0.672 | 18.87 | 3.6% |
| 6/15/2009 | 0.166 | 0.695 | 15.82 | 4.4% |
| 3/23/2009 | 0.151 | 0.72 | 14.56 | 4.9% |
| 12/15/2008 | 0.184 | 0.569 | 20.11 | 2.8% |
| 9/15/2008 | 0.194 | 0.592 | 23.47 | 2.5% |
| 6/16/2008 | 0.191 | 0.602 | 24.04 | 2.5% |
| 3/24/2008 | 0.207 | 0.618 | 36.31 | 1.7% |
| 12/17/2007 | 0.204 | 0.615 | 35.27 | 1.7% |
| 9/17/2007 | 0.207 | 0.6 | 34.3 | 1.7% |
| 6/18/2007 | 0.204 | 0.581 | 39.64 | 1.5% |
| 3/19/2007 | 0.189 | 0.556 | 29.95 | 1.9% |
| 12/18/2006 | 0.188 | 0.552 | 27.72 | 2.0% |
| 9/18/2006 | 0.179 | 0.546 | 24.56 | 2.2% |
| 6/19/2006 | 0.185 | 0.542 | 18.98 | 2.9% |
| 3/20/2006 | 0.182 | 0.533 | 23.02 | 2.3% |
| 12/15/2005 | 0.175 | 0.523 | 23.97 | 2.2% |
| 9/19/2005 | 0.176 | 0.5 | 19.48 | 2.6% |
| 6/20/2005 | 0.172 | 0.473 | 18.91 | 2.5% |
| 3/14/2005 | 0.152 | 0.451 | 37.55 | 1.2% |
| 12/13/2004 | 0.149 | 0.448 | 34.56 | 1.3% |
| 9/14/2004 | 0.15 | 0.437 | 32.56 | 1.3% |
| 6/15/2004 | 0.149 | 0.429 | 33.47 | 1.3% |
| 3/16/2004 | 0.138 | 0.4275 | 34.03 | 1.3% |
| 12/15/2003 | 0.142 | 0.44 | 32.39 | 1.4% |
Source: Yahoo!Finance
With the spin-off of its international division, TMX became a much stronger dividend stock; however, its dividend has declined over the past two years. While this might be attributed to recent financial challenges, it could pose a worrisome trend for investors.
Grupo Aeroportuario del Centro Norte (OMAB) is an airport operator in central and northern Mexico. The firm has approximately 1,000 employees and operates 13 airports. OMAB recently closed at $15.55. OMAB has a much smaller dividend history than TMX. OMAB also pays dividends that are very regular, at quarterly intervals.
| Date | Dividends (US$) | Trailing 12 months of dividends | Closing Stock Price (US$) | Implied Yield (%) |
| 1/12/2011 | 0.162 | 0.636 | 15.90 | 4.0% |
| 10/12/2010 | 0.162 | 0.626 | 15.11 | 4.1% |
| 7/12/2010 | 0.162 | 0.610 | 13.27 | 4.6% |
| 4/12/2010 | 0.150 | 0.594 | 15.25 | 3.9% |
| 1/12/2010 | 0.152 | 0.653 | 13.80 | 4.7% |
| 10/9/2009 | 0.146 | 0.710 | 12.30 | 5.8% |
| 7/10/2009 | 0.146 | 0.773 | 9.42 | 8.2% |
| 4/9/2009 | 0.209 | 0.838 | 8.35 | 10.0% |
| 1/12/2009 | 0.209 | 0.833 | 10.29 | 8.1% |
| 10/9/2008 | 0.209 | 0.822 | 8.29 | 9.9% |
| 7/10/2008 | 0.211 | 0.810 | 16.14 | 5.0% |
| 4/10/2008 | 0.204 | 0.798 | 23.28 | 3.4% |
Source: Yahoo!Finance
OMAB shows much more consistent dividend payments than TMX. Two potential issues it might face are increasing concerns about tourism into Mexico as well as recovering from the Great Recession. While dividends are off from recent highs around $0.21 per quarter, the dividends have been growing recently. Also, comparing the recent stock price history against dividend yields suggests that the majority of the recent historical return has been in the form of dividends.
Banco de Chile (BCH) provides personal and business banking services to customers in the United States and Chile. The company has several hundred branches and provides services from 1,588 ATMs. It was founded back in 1893. BCH pays an annual dividend with an ex-dividend date in the middle of March. Hence the dividend for 2011 has already been declared.
| Date | Dividends (US$) | Closing Price (US$) | Yield (%) |
| 3/9/2011 | 3.67 | 84.35 | 4.3% |
| 3/17/2010 | 3.90 | 59.08 | 6.6% |
| 3/18/2009 | 2.33 | 35.00 | 6.7% |
| 3/17/2008 | 4.55 | 55.44 | 8.2% |
| 3/14/2007 | 2.21 | 45.45 | 4.9% |
| 3/15/2006 | 0.35 | 40.91 | 0.9% |
| 3/9/2005 | 2.38 | 35.75 | 6.6% |
| 3/10/2004 | 1.94 | 30.60 | 6.3% |
| 3/12/2003 | 0.61 | 16.85 | 3.6% |
Source: Yahoo!Finance
BCH's dividend yield has ranged typically from around 4% to 6% with the exception of an off year in 2006. You can also clearly see the impact of 2008 in the dividend payments; however, the stock has subsequently recovered. From 2008 to 2009, BCH lost approximately 35% of its revenue.
Administradora de Fondos de Pensiones-Provida, S.A. (PVD) was the highest yielding ADR that I identified in my screening. PVD is a financial company offering a variety of investment services. PVD's private pension program services include voluntary savings accounts, voluntary pension savings, life and disability benefits, investment services, and accounts administration. While PVD is publicly traded, a majority of it is owned by BBVA Pensiones Chile S.A. The company has been in operation for approximately 30 years. PVD typically makes semi-annual dividend payments in April or May as well as October. PVD did not make a payment in May 2009.
| Date | Dividends (US$) | Trailing 12 months (US$) | Closing Stock Price (US$) | Implied Yield (%) |
| 10/20/2010 | 1.83 | 5.42 | 68.15 | 7.9% |
| 5/18/2010 | 3.59 | 5.17 | 45.30 | 11.4% |
| 10/21/2009 | 1.59 | 1.59 | 37.53 | 4.2% |
| 10/15/2008 | 0.28 | 1.77 | 17.13 | 10.3% |
| 5/14/2008 | 1.49 | 2.15 | 34.85 | 6.2% |
| 10/17/2007 | 0.66 | 2.03 | 36.82 | 5.5% |
| 5/16/2007 | 1.38 | 1.91 | 28.13 | 6.8% |
| 10/18/2006 | 0.53 | 2.42 | 25.54 | 9.5% |
| 5/4/2006 | 1.89 | 2.73 | 25.37 | 10.8% |
| 10/12/2005 | 0.84 | 1.98 | 28.55 | 6.9% |
| 5/11/2005 | 1.14 | 1.89 | 25.98 | 7.3% |
| 10/13/2004 | 0.74 | 2.03 | 26.10 | 7.8% |
| 5/12/2004 | 1.28 | 1.82 | 27.20 | 6.7% |
| 10/15/2003 | 0.54 | 1.69 | 25.18 | 6.7% |
| 5/13/2003 | 1.15 | 1.72 | 24.60 | 7.0% |
| 10/8/2002 | 0.57 | 0.84 | 21.58 | 3.9% |
| 5/9/2002 | 0.27 | 0.77 | 23.39 | 3.3% |
| 10/10/2001 | 0.50 | 1.41 | 23.50 | 6.0% |
| 5/11/2001 | 0.90 | 1.38 | 22.64 | 6.1% |
| 10/18/2000 | 0.48 | 0.91 | 20.75 | 4.4% |
| 5/5/2000 | 0.43 | 0.56 | 20.62 | 2.7% |
| 12/6/1999 | 0.12 | 0.37 | 20.47 | 1.8% |
| 10/13/1999 | 0.25 | 1.45 | 19.72 | 7.3% |
| 5/6/1999 | 1.20 | 1.61 | 20.89 | 7.7% |
| 10/6/1998 | 0.41 | 0.62 | 12.47 | 5.0% |
| 4/27/1998 | 0.21 | 0.73 | 16.40 | 4.4% |
| 10/7/1997 | 0.52 | 1.26 | 16.48 | 7.6% |
| 4/28/1997 | 0.74 | 1.16 | 17.81 | 6.5% |
| 10/9/1996 | 0.42 | 1.22 | 18.00 | 6.8% |
| 5/1/1996 | 0.80 | 1.05 | 18.35 | 5.7% |
| 10/5/1995 | 0.25 | 0.49 | 21.35 | 2.3% |
Source: Yahoo!Finance
So while PVD has the highest yield, it is also inconsistent with its historical yields. One key question would be understanding what is currently driving growth at the company. Prior to 2008, there was little price appreciation - shareholder return was driven through dividends. In the middle of 2008, the stock price cratered, losing between 60-70% of its value. However, since then the stock has recovered and now trades at 2x its price at the end of 2007. However, dividend yields remain essentially at the same high rate. The May 2010 dividend was approximately twice any previous dividend payment. Is this sustainable?
Conclusions
Analyzing historical dividend payments and yields provides additional insight into what might be viewed as normal operating conditions. Purchasing a company based simply on current yield alone might result in significant disappointment. Furthermore, it is critically important to do additional fundamental research. A company like PVD cries out for this. While it has an attractive yield, there might be fundamental value questions. Has its run up been driven solely by significant increases in dividend payments? From this list of four ADRs, I think BCH is probably the most interesting stock for additional review.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: This article is for informational and educational purposes only and shall not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security.
