What Stocks to Buy as the Market Crumbles

by: David Hunkar

Global stocks fell heavily across the board yesterday. Panic selling in the markets usually presents buying opportunities. Investors looking to deploy capital during uncertain times can buy high-quality dividend-paying stocks at cheap prices.

Some of the reasons for investing in dividend-paying stocks are listed below:

  • 90% of the U.S. equity returns in the past century has been delivered by dividends and dividend growth.
  • Dividend payers usually have superior returns than non-payers as shown in the chart below:

(Click to enlarge)

  • Since 1970, more than 80% of European returns have come from a combination of yield and real dividend growth.
  • Over the past 30 years, well over 90% of UK, Germany and France returns have come from dividends and dividend growth according to research by Societe Generale.
  • Globally, high-dividend-yield and high-dividend-growth stocks have consistently outperformed the broad market while also handily outpacing simple high yield stocks as shown in the graph below:

(Click to enlarge)

  • Foreign dividend stocks have consistently higher yields than U.S. stocks.
  • In low-growth environments such as the one we are in now, high-yielding stocks have traditionally outperformed.

Source: Why Dividends Make A Difference, Blackrock

10 randomly selected foreign stocks yielding more than 5% dividends are listed below for further research:

1. Company: Empresa Nacional de Electricidad SA (NYSE:EOC)
Current Dividend Yield: 6.75%
Sector:Electric Utilities
Country: Chile

2. Company: National Grid PLC (NYSE:NGG)
Current Dividend Yield: 6.01%
Sector:Electric Utilities
Country: UK

3. Company:Cpfl Energia SA (NYSE:CPL)
Current Dividend Yield: 5.66%
Sector:Electric Utilities
Country: Brazil

4. Company: Telstra Corp Ltd (OTCPK:TLSYY)
Current Dividend Yield: 8.87%
Sector: Telecom
Country: Australia

5. Company: Aviva PLC (NYSE:AV)
Current Dividend Yield: 7.22%
Sector: Life Insurance
Country: UK

6.Company: City Telecom Ltd. (CTEL)
Current Dividend Yield: 7.21%
Sector: Telecom
Country: Hong Kong

7. Company: Philippine Long Distance Telephone Co. (NYSE:PHI)
Current Dividend Yield: 6.49%
Sector: Telecom
Country: Philippines

8. Company: Allianz Se (OTCQX:AZSEY)
Current Dividend Yield: 5.72%
Sector: Life Insurance

9. Company: Stora Enso Oyj (OTCPK:SEOAY)
Current Dividend Yield: 5.17%
Sector:Paper & Paper products
Country: Finland

10. Company:Gdf Suez SA (GDFZY.PK)
Current Dividend Yield: 6.99%
Sector: Electric Utilities
Country: France

Note: Dividend yields noted above are as of market close August 8, 2011

Disclosure: No Positions