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We continue to focus in on dividend yielding stocks as a means of providing income as well as growth in these days of the new normal of low interest rates and turbulent markets. Patrick Martin of the Motley Fool looks at companies with good yields and global markets to provide market diversification.

There are five on his list:

  • Philip Morris International (NYSE:PM) pays a 3.9% dividend. Tobacco stocks are certainly a questionable investment, and this may be one that shouldn't be considered.
  • Diageo (NYSE:DEO) pays a dividend of 3.4%, Diageo has an impressive portfolio of well-known beer and liquor brands including Smirnoff, Guinness, and Captain Morgan. Its network spans 180 countries, but this may be another company whose product makes it a question as to whether to invest.
  • Yum Brands (NYSE:YUM) pays a dividend of 1.9%. Yum Restaurants International, which handles the company's locations outside of the U.S. and China, opened 193 new locations during the third quarter of 2011 and expected to have opened 900 new locations during the course of the year.
  • Vodaphone (NASDAQ:VOD) pays a dividend of 3.5%. Vodaphone is the world's largest mobile phone operator. While investors may associate the company primarily with Europe, it has global reach and emerging markets are of particular interest.
  • Intel (NASDAQ:INTC) pays a dividend of 3.3%. While the PC market domestically has limited growth potential, there is opportunity in emerging markets and sooner or later, it will figure out a successful mobile solution.

These are five strong equities that are worth measuring to see how they compare with other dividend bearing selections we have made. We will start by measuring it against our dividend-bearing ETF portfolio:

Asset Fund in this portfolio
REAL ESTATE (NYSEARCA:ICF) iShares Cohen & Steers Realty Majors
CASH CASH
FIXED INCOME (NYSEARCA:TIP) iShares Barclays TIPS Bond
Emerging Market (NYSEARCA:VWO) Vanguard Emerging Markets Stock ETF
US EQUITY (NYSEARCA:DVY) iShares Dow Jones Select Dividend Index
US EQUITY (NYSEARCA:VIG) Vanguard Dividend Appreciation ETF
INTERNATIONAL EQUITY (NYSEARCA:IDV) iShares Dow Jones Intl Select Div Idx
High Yield Bond (NYSEARCA:HYG) iShares iBoxx $ High Yield Corporate Bd
INTERNATIONAL BONDS (NYSEARCA:EMB) iShares JPMorgan USD Emerg Markets Bond

Portfolio Performance Comparison

Portfolio/Fund Name 1-Year AR 1-Year Sharpe 3-Year AR 3-Year Sharpe 5-Year AR 5-Year Sharpe
Retirement Income ETFs Strategic Asset Allocation Moderate 1% 6% 15% 98% 2% 7%
Retirement Income ETFs Tactical Asset Allocation Moderate 2% 9% 10% 72% 8% 55%
Dividends for the International Investor 24% 128% 28% 140%

The history only goes back to 2008 because that is when PMI was created. Despite this, we can see good performance througout the period -- both in terms of returns and risk adjusted returns.

Fund in this portfolio Percentage
PM (Philip Morris International Inc.) 24.12%
DEO (Diageo plc (ADR) 16.84%
YUM (Yum! Brands Inc.) 24.61%
VOD (Vodafone Group) 15.39%
INTC (Intel) 19.03%

We can see that PM and YUM are the major contributors to the group with VOD and DEO bringing up the rear. Still, this is not too much out of balance and with annual adjustments, this could be a reasonable combination.

Three Month Chart One Year Chart Three Year Chart Five Year Chart
Simply put, this is selection that has performed well. It might be worth doing some research to find alternatives for PMI and DEO -- perhaps McDonald's (NYSE:MCD) and Johnson & Johnson (NYSE:JNJ) -- but this is still a selection that is worth considering.

Portfolio Performance Comparison

Portfolio/Fund Name 1-Year AR 1-Year Sharpe 3-Year AR 3-Year Sharpe 5-Year AR 5-Year Sharpe
Dividends for the International Investor 24% 128% 28% 140%
JNJ-MCD not PMI DEO Dividends for the International Investor 27% 139% 26% 129% 14% 54%
Retirement Income ETFs Tactical Asset Allocation Moderate 2% 9% 10% 72% 8% 55%
Retirement Income ETFs Strategic Asset Allocation Moderate 1% 6% 15% 98% 2% 7%

When I did this, I saw similar performance, and this may be a preferred choice.

Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

Source: 5 Dividend Stocks For International Exposure