5 Top International Dividend Stocks According To The Fool

Includes: ABB, CRH, CS, SID, SNY
by: MyPlanIQ

Dividend stocks can be a useful method of augmenting income while bond yields are under pressure. They do not replace bonds as they have much higher volatility and it is important to consider diversification. To that end, I noted a selection by Alex Dumortier of the Motley Fool, who looks at International Dividend stocks.

His selection has four European and one Brazilian stock. With the debt worries in the Eurozone having a downward pressure on stocks, this may seem like a risky move. However, it may be possible to find stocks that will continue perform well -- especially if they have worldwide exposure.

Alex's selections are shares you can buy directly on the NYSE and that pay a yield well in excess of that on the S&P 500.

  • Sanofi (NYSE:SNY) France / Pharmaceuticals 4.7%
  • CRH (NYSE:CRH) Ireland / Construction Materials 4.8%
  • ABB (NYSE:ABB) Switzerland / Heavy Electrical Equipment 3.4%
  • Companhia Siderurgica Nacional (NYSE:SID) Brazil / Steel 8.4%
  • Credit Suisse (NYSE:CS) Switzerland /Diversified Capital Markets 3.1%

Source: S&P Capital IQ, author's calculations.

These are major companies that are in different markets. There is no reason that they shouldn't have international markets -- I would think that CRH is the one that is most likely to serve more local customers. This is an interesting selection and worthy of comparison with our broadly diversified dividend bearing ETF portfolio. It will be interesting to see how they compare with our reference dividend bearing ETF portfolio.

Asset Fund in this portfolio
REAL ESTATE (NYSEARCA:ICF) iShares Cohen & Steers Realty Majors
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
High Yield Bond (NYSEARCA:HYG) iShares iBoxx $ High Yield Corporate Bd

Portfolio Performance Comparison

Portfolio/Fund Name YTD
1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
Retirement Income ETFs Tactical Asset Allocation Moderate 1% -2% -25% 10% 81% 7% 55%
Retirement Income ETFs Strategic Asset Allocation Moderate 5% -1% -11% 13% 107% 2% 8%
5 Top International Dividend Stocks 1% -25% -67% -0% -1%

I am not really surprised that the returns are poor over the time frame that the selection has existed as a portfolio. I am going to split out the individual stocks to see if there are some strong performers in the group.

Portfolio Performance Comparison

Portfolio/Fund Name YTD
1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
ABB 13% 40% 156% -2% -5% 18% 39%
SID -29% -39% -79% -22% -30%
CRH -17% 13% 30% -53% -27% -40% -6%
SNY 18% 1% 42% 12% 34% -0% -8%
CS -8% -19% -68% -10% -15% -7% -14%

As I look at the individual performers, the only ones I would take is ABB and SNY. These are worldwide brands and they have the best returns.

Five Year Chart

We can see the cyclical nature of ABB's business, and none of the other stocks provide a counter balance against it.

Five Year Chart

Then we can see how the more diversified portfolios reduce the volatility and is a better overall solution.

I don't see any merit in this selection -- some of the names are OK but these aren't stocks that are going to be in my list as I think they will still be significantly impacted by the Eurozone crisis, and the Brazilian steel manufacturer doesn't stand out either. I am sure there are better international stocks that these.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.