Guraaf's  Instablog

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I immigrated to the US in 2006. I started investing in India in 1999 just when the Indian markets were taking off. India had its share of Irrational Exuberance and eventually I lost quite a bit in Tech stocks from 1999 to 2002. After that I slowly moved on to cyclical (capital goods,... More
  • British Dividend Yield stocks 0 comments
    Dec 27, 2011 9:31 AM | about stocks: AZN, BBL, BTI, GSK, BP, VOD, UL, NGG
    I recently wrote an Instablog on German companies that pay decent dividend yields.  Now I turn my focus on British stocks.  I had mentioned earlier that the biggest issues with investing in foreign companies listed on the US stock exchanges are:
    a) currency risk, 
    b) irregular dividends and 
    c) tax deducted by foreign govt on dividends
    These aspects don't bother me at all since I am looking to invest for the next 5-20 years and I am still earning so don't need an income stream.  Also I buy all stocks in regular brokerage account so can claim tax credit for all foreign taxes paid.  I like British stocks especially because they do not deduct foreign taxes and hence I can buy them in retirement account as well.  A lot of the British companies do business around the world due to historical reasons when England had many colonies.
    1. AstraZeneca (NYSE:AZN) - 6%.  British pharma giant that was formed a few years ago when Astra of Sweden merged with Zeneca of England.  AZN has its share of big-pharma patent-type of issues but I feel that the dividend for this stock is more reliable than some of the other big pharma.  It has also raised its dividend in each of the previous 5 years and has a Dividend CAGR of 9%.
    2. Vodafone (NASDAQ:VOD) - 6% (excluding the special dividend for the current year).  Cellphone operator that has provides wireless services around the world.  They have significant presence in the emerging markets.  They also own almost half of Verizon Wireless (the rest is owned by Verizon).  Their global footprint makes it my favorite telecommunication and div yield stock.  The dividend CAGR for last 5 years has been approx 7%.
    3. Unilever (NYSE:UL) - 3.6%.  An Anglo-Dutch food and personal care giant based in London and Amsterdam.  It is similar to P&G in many ways - had a huge presence in the emerging markets though the company had a complex organizational structure earlier and couldn't benefit much from the explosive growth in some markets.  It is now becoming far better organized.  The dividend CAGR is about 5%.
    4. National Grid (NYSE:NGG) - 6%.  Electric and Gas Utility company that has interests in New England and New York also.  The dividend has been flat over the past five years.
    5. British American Tobacco (NYSEMKT:BTI) - 4%.  Century-old tobacco giant that has grown dividend at a CAGR of 11% over last 5 years.  Own Dunhill, Kent, Pall Mall among many other brands.
    6. BHP Billiton (NYSE:BBL) - 3.5%. British/Australian mining giant that has increased rapidly over the last 5 years.  The CAGR is 17%.  I prefer BBL over BHP which is the Australian ADR so there is some tax deducted.
    7. GlaxoSmithKline (NYSE:GSK) - 5%.  Pharma giant that hasn't grown dividends in the last 5 years.  I haven't  yet figured out if they have any major patent-cliff kind of issues and how well are they growing in the emerging markets.
    8. BP (NYSE:BP) - 3%.  The dividend yield is much lesser than a lot of the other big-oil companies after BP cuts its dividend to pay for the oil spill in the Gulf of Mexico.  I do expect the dividend to be slowly increased in the next 2-3 years and the stock price to increase in anticipation of the dividend growth as well as actual dividend increases.  I would buy BP on a bad day, e.g., if they have any setbacks related to their joint ventures around the world or with the legal issues related to the oil spill since I do expect to resolve these issues over the long term.
    Disclosure - I am long AZN, VOD, UL, BBL.  I have limit buy order for BP and NGG.
    Stocks: AZN, BBL, BTI, GSK, BP, VOD, UL, NGG
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