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There is a wealth of information available in the Investing for Income section of Seeking Alpha. A lot of authors and other users have discussed dividend yield stocks, especially American companies. In this article, I focus on British stocks which I particularly like because of:

  • Well regulated mature stock market and good corporate governance
  • Large well-recognized companies with long history
  • History of commitment to dividend policies
  • No foreign taxes deducted for U.S. investors
  • Relative stability of their currency, GBP, against USD.

Negatives of investing in Internationals include:

  • Currency fluctuations
  • Dividends are often half-yearly or yearly instead of quarterly. A lot of foreign companies like to think of paying a final dividend after the financial year closes and they know what they made. Some may pay a half-year "interim" dividend since they do know that they can sustain that. This differs from a typical US company.
  • Foreign taxes deducted out of dividends, though this does not apply to British companies.

1. AstraZeneca Pharma (AZN)

AstraZeneca is a pharma giant based out of London. It was formed in 1999 when Astra of Sweden merged with Zeneca of England. It is present in all major areas of pharma - Cardio, Neuro, Gastro, Oncology, Vaccines, Respiratory etc. It does face the typical big-pharma issues related to patent cliff but so far the dividend looks safe.

  • Market Cap: $61 billion
  • Projected Div Yield: 3.7%
  • P/E: 6.4
  • P/B: 2.5
  • P/CF: 7.7
  • RoE: 43.94%
  • Dividends per year: Two (Interim + Final)
  • DRIP: offered
  • Dividend Payout Ratio: 37%

2. BHP Billiton Plc (BBL)

BHP Billiton is a global mining giant that was formed in 2001 when BHP of Australia and Billiton of England merged. The company has access to a large number of mines around the world and has interests in alumina, steel, coal, iron ore, base metals, diamonds, uranium and many other. They have demonstrated a strong commitment to increasing dividends over the last few years and have a decent yield right now. They have a dual corporate structure and there are two ticker symbols - BBL for the British company that deducts no foreign tax on dividends and BHP for the Australian company that does deduct foreign taxes.

  • Market Cap: $159 billion
  • Projected Div Yield: 3.8%
  • P/E: 6.9
  • P/B: 2.8
  • P/CF: 5.5
  • RoE: 44.9%
  • Dividends per year: Two (Interim + Final)
  • DRIP: off
  • Dividend Payout ratio: 24%

3. British American Tobacco (BTI)

British American Tobacco (or BAT is it popularly known as) is one of the world's most global tobacco companies. Their brands include Dunhill, Kent, Lucky Strike, Pall Mall, Benson & Hedges, 555, Rothmans, and Kool, which are sold in more than 180 countries. They do have some minor interests in cigars and smokeless tobacco (snus) as well. The company holds a significant stake in Reynolds American Inc as well.

  • Market Cap: $94 billion
  • Projected Div Yield: 2.5%
  • P/E: 18.9
  • P/B: 7.0
  • P/CF: 13.8
  • RoE: 37.7%
  • Dividends per year: Two (Interim + Final)
  • DRIP: none offered
  • Dividend Payout ratio: 77%

4. GlaxoSmithKline (GSK)

GlaxoSmithKline is a global pharma giant that has interests in pharmaceuticals, nutrition and vaccines. The company was formed when Glaxo Wellcome and SmithKline Beecham merged in 2000. Glaxo does face some issues related to drugs going off-patent in the near future but they do have a huge non-pharma business as well that includes Sensodyne, Nicorette, Horlicks and many OTC drugs and vaccines. The patent cliff is probably less severe than for other companies like Pfizer (PFE) or Eli Lilly (LLY).

  • Market Cap: $116 billion
  • Projected Div Yield: 4.8%
  • P/E: 23.1
  • P/B: 10.1
  • P/CF: 13.8
  • RoE: 38.48%
  • Dividends per year: Four (Quarterly)
  • DRIP: offered
  • Dividend Payout ratio: 110%

5. National Grid (NGG)

National Grid supplies electricity and gas to customers in Great Britain. They also acquired Keyspan in 2007 and now have a few million electricity customers in the Northeast US. Their dividend has been largely constant over the last few years but appears very safe. I prefer them over other US utilities to get me diversification (currency and economy).

  • Market Cap: $36 billion
  • Projected Div Yield: 4.5%
  • P/E: 10.3
  • P/B: 2.8
  • P/CF: 4.9
  • RoE: 28.8%
  • Dividends per year: Two (Interim + Final)
  • DRIP: offered
  • Dividend Payout ratio: 63%

6. Unilever (UL)

Unilever is a food and personal care products global giant that sells products in more than 180 countries. They are similar to P&G (PG) though smaller in scale (annual revenue). Their brands include Dove, Lux, Pond's, Rexona, Lipton, Brooke Bond, Ben & Jerry's, Hellman's, Knorr, Slim-Fast, Sunlight, Surf and a few more. They are an Anglo-Dutch company and have two symbols listed on the US exchanges - UL for the British company and UN for the Netherlands entity. There is no foreign tax deducted for UL but tax is deducted for UN which makes UL suitable for both individual brokerage accounts as well as retirement accounts. Unilever did not deliver much financially over the last few years but based on the company presentations, I am willing to make a bet that they will do reasonably well over the next few years and that the current dividend is very safe.

  • Market Cap: $103 billion
  • Projected Div Yield: 3.7%
  • P/E: 17.3
  • P/B: 5.2
  • P/CF: 15
  • RoE: 32.08
  • Dividends per year: Four (Quarterly)
  • DRIP: yes
  • Dividend Payout ratio: 63%

7. Vodafone (VOD)

Vodafone is the world's largest telecom operator by revenue with operations in more than 70 countries (directly owned service or via partners). It owns roughly 45% of Verizon Wireless (the rest 55% is owned by Verizon). Vodafone has been growing rapidly in Asia and Africa. The holding structure had been complex over the last few years of breakneck growth but now they have started streamlining operations. I like them for their dividend yield and I think that Verizon Wireless will continue to pay dividends to its owners even if at irregular intervals because I think that both Verizon (VZ) and Vodafone need cash for their operations.

  • Market Cap: $141 billion
  • Projected Div Yield: 3.8%
  • P/E: 13.3
  • P/B: 1.1
  • P/CF: 8.1
  • RoE: 8.15
  • Dividends per year: Two (Interim + Final)
  • DRIP: offered
  • Dividend Payout ratio: 66%

The following table gives the current dividend yield and the Dividend CAGR for the last 3, 5 and 9-years. I list the dividend increase rate in both U.S dollars and the native currency (GB Pounds). I use the latter because it helps me determine management's commitment to increasing dividends. It also helps me get a feel for the direction in which the foreign currency is headed - stable, strengthening or collapsing.

Company

Ticker

Price

P/E

Div Yield

3-yr Inc

5-yr Inc

9-yr Inc

3-yr Inc

5-yr Inc

9-yr Inc

In U.S. Dollars

In GB Pounds

AstraZeneca

AZN

45.87

6.4

5.90%

12%

14%

16%

21%

17%

15%

BHP Billiton

BBL

58.02

6.9

3.80%

13%

23%

25%

n/a

British American Tobacco

BTI

94.7

18.66

4.08%

12%

17%

15%

20%

20%

15%

GlaxoSmithKline

GSK

45.68

23.1

4.70%

1%

5%

2%

7%

7%

6%

National Grid

NGG

48.61

10.3

6.15%

0%

3%

9%

3%

7%

10%

Unilever

UL

33.58

17.3

3.70%

8%

4%

4%

n/a

Vodafone

VOD

27.74

13.3

5.09%

-2%

5%

23%

6%

8%

22%

There are a few more British dividend-paying stocks worth investigating like Aviva (AV), BP (BP), Diageo (DEO) and HSBC (HBC). I hope to follow up with stocks from the Euro-zone, Swiss stocks and a few from around the world.

Source: 7 Solid Dividend Stocks From England