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One of the best ways to get exposure to foreign markets is to invest in American Depository Receipts (ADRs). Purchasing ADRs have much lower transaction costs than purchasing through local exchanges because buying ADRs do not have costs of converting USD to the stocks' local currency. Investors can achieve a more diversified portfolio by investing in ADRs. ADRs can also protect investors from dollar inflation and enable investors to benefit from the higher growth rates in foreign markets.

Below we compiled a list of 9 ADRs with tremendous growth rates that also pay fat dividend checks regularly. All companies have market capitalization above $10 billion, P/E ratios smaller than 20, dividend yields of at least 4% and EPS growth of over 10% annually in the last five years. The market data is sourced from Finviz.

Ticker

Company

P/E

EPS growth

Dividend Yield

YTD Return

MBT

Mobile Telesystems OJSC

13.41

13.70%

6.35%

12.33%

YPF

YPF S.A.

11.5

15.36%

8.76%

11.74%

SAN

Banco Santander-Chile

19.53

11.25%

4.01%

11.69%[[

SDRL

SeaDrill Limited

9.15

10.20%

8.39%

9.22%

PWE

Penn West Petroleum Ltd.

15.18

27.30%

4.91%

8.84%

HBC

HSBC Holdings plc

8.67

16.80%

4.35%

8.58%

BCH

Banco de Chile

14.14

12.07%

4.06%

8.12%

STD

Banco Santander, S.A.

5.77

12.40%

11.34%

4.35%

BTI

British American Tobacco plc

18.11

10.40%

4.29%

-5.31%

Mobile TeleSystems OJSC (MBT) is the best performing stock on the list above. It returned 12.33% since the beginning of this year, versus 4.75% for SPY in the same period. Mobile TeleSystems OJSC is a Russia-based telecommunications provider focusing on the provision of mobile and fixed line voice and data telecommunications services. MBT has a market cap of $16.4B and a relatively low P/E ratio of 13.41. It has a high dividend yield of 6.35% and its EPS is expected to grow at 13.7% per year over the next five years. At the end of the third quarter last year, there are 10 hedge funds with MBT positions. For instance, Jim Simons' Renaissance Technologies initiated a brand new $12.5 million MBT during the third quarter. The stock was up 34.07% so far since the end of September, versus 16.92% for SPY.

YPS SA (YPF) also generated double-digit return since the beginning of this year. The stock gained 11.74% so far, outperforming the market by 7 percentage points. YPF SA is an integrated oil and gas company based in Argentina. It has a market cap of $15.2B and a low P/E ratio of 11.5. It also has a high dividend yield of 8.76% and its EPS is expected to grow at 15.36% annually in the next five years. There are 12 hedge funds with YPF positions at the end of September last year. Eric Mindich's Eton Park Capital reported to own $334 million worth of YPF shares at the end of the third quarter. YPF was up 18.83% since then, beating the S&P 500 index by two percentage points.

One mega-cap dividend ADR is HSBC Holdings PLC (HBC). It has a market cap of $148B and a dividend yield of 4.35%. The stock returned 8.58% so far this year, beating the market by four percentage points. HSBC is a global banking and financial services organization. It has a low P/E ratio of 8.67 and its EPS is expected to grow at 16.8% per year in the next five years. There are 12 hedge funds disclosed owning HBC in their 13F portfolios at the end of the third quarter last year. Both Jim Simons' Renaissance Technologies and Israel Englander's Millennium Management opened new HBC position over the third quarter.

Other dividend ADRs with tremendous returns include Banco de Chile (BCH), Banco Santander SA (STD), British American Tobacco PLC (BTI), Banco Santander-Chile (SAN), SeaDrill Limited (SDRL), and Penn West Petroleum Ltd (PWE). We are concerned about the Fed's inflationary monetary policies. These policies may lead to inflation and a decline in the value of US dollar. Therefore, we encourage investors to play defensively by purchasing dividend stocks and get exposure to the foreign markets by purchasing ADRs.

Source: Top 9 Dividend ADRs With Tremendous Returns