Top International Dividend Stocks - May 2012 - Danger Ahead!

by: Intelligent Speculator

For several months now, I have been able to put together lists of top international stocks mostly sorting them in terms of dividend yields. We did take a deeper look at some of those names in greater detail such as Vodafone (NASDAQ:VOD) while also adding a stock with great international exposure in Aflac (NYSE:AFL) to both the Ultimate Sustainable Dividend Portfolio and one of the 4 stocks that I picked in this year’s stock picking competition.

I’ve written about a critical aspect of dividend investing in the past, which is more critical than ever when looking at international dividend stocks:

Looking beyond dividend yield

If you take a deeper look at the top dividend yields for international stocks you will see a very strong trend for European stocks that are coming out near the top of those rankings. That is a group of stocks that I am personally very prudent before buying. Why? Mainly these reasons:

European Chaos

Europe seems to be nearing a cliff in many different ways with Greece and other nations in serious trouble. One of the big results has been a very difficult time for companies operating there, especially banks located in countries such as Greece and Spain. Citizens in those countries have been increasingly worried about what will happen and continued to move their assets to foreign banks, especially in Germany. Thus, I would not be buying dividend stocks of such banks even if they offer great dividend yields.

European Telecoms

While there are also many concerns about many of these companies which have been at the top of previous international rankings but also U.S. ones (with FTR at the very top), many of these companies pay high dividends that are unfortunately not sustainable. I think it’s critical to consider the long-term perspectives for these companies before starting to buy them, as I had done when looking into Vodafone.

When It’s Too Good To Be True…

Look at the rankings and you will see the very top dominated by YPF SA, an Argentina-based oil company, which is stuck in the middle of huge changes. It remains unclear how the company will be able to keep operating on a private basis and pay reliable, sustainable dividends. Why? The Argentinian government is actually taking over the company. How will it impact shareholders? That remains to be seen. You can see some posts about it on Marketwatch for example. Personally I’m staying away:)

As you can see, there are no miracle, 10% or 15% dividend yield stocks but there are several other high-quality candidates, which you can see here:

Ticker Name Industry Price Dividend Yield Payout Ratio
YPF YPF SA Oil Comp-Integrated 12.45 26.88 N/A
PT Portugal Telecom SGPS SA Telephone-Integrated 4.5 15.75 400.5
STD Banco Santander SA Consumer Banks 5.79 15.59 99.45
BMA Banco Macro SA Consumer Banks 13.95 14.93 N/A
EC Ecopetrol SA Oil Comp-Integrated 59.24 14.81 38.58
FTE France Telecom SA Telephone-Integrated 13.18 13.53 95.21
NZT Telecom Corp of New Zealand Ltd Telecom Services 9.96 11.93 211.25
AV Aviva PLC Life/Health Insurance 8.68 11.66 102.73
IRS IRSA Inversiones y Representaciones SA Real Estate Oper/Develop 7.41 11.59 N/A
PVD Administradora de Fondos de Pensiones Provida SA Investment Companies 78.31 10.47 N/A
VIP VimpelCom Ltd Telecom Services 8.68 9.59 221.72
AZN AstraZeneca PLC Medical-Drugs 41.62 9.37 36.84
GFA Gafisa SA Real Estate Oper/Develop 2.53 8.99 N/A
BSI Alon Holdings Blue Square Israel Ltd Food-Retail 2.7 8.95 126.02
TEF Telefonica SA Telephone-Integrated 12.55 8.33 135.16
WBK Westpac Banking Corp Consumer Banks 101.94 8.25 67.27
BBVA Banco Bilbao Vizcaya Argentaria SA Consumer Banks 6.28 7.72 68.55
TI.A Telecom Italia SpA Telephone-Integrated 7.51 7.67 N/A
NGG National Grid PLC Gas-Distribution 52.84 7.63 68.81
CTEL City Telecom HK Ltd Telecom Services 10.3499 7.09 73.71
TEO Telecom Argentina SA Telephone-Integrated 12.48 7.05 N/A
SFUN SouFun Holdings Ltd Internet Content-Info/Ne 14.3 6.85 0
CPL CPFL Energia SA Electric-Integrated 23.95 6.83 81.08
TLK Telekomunikasi Indonesia Persero Tbk PT Telecom Services 33.76 6.67 N/A
BCA Corpbanca Consumer Banks 18.98 6.49 N/A
SID Cia Siderurgica Nacional SA Steel-Producers 6.68 6.46 25
VE Veolia Environnement SA Water 12.18 6.43 N/A
ENL Reed Elsevier NV Publishing-Books 21.96 6.42 69.79
RUK Reed Elsevier PLC Publishing-Periodicals 31.26 6.42 66.58
AWC Alumina Ltd Metal-Aluminum 3.74 6.36 115.64
SNP China Petroleum & Chemical Corp Oil Comp-Integrated 91.21 6.21 35.52
ATAI ATA Inc/China Computer Software 6.81 6.02 0
BTI British American Tobacco PLC Tobacco 96.13 5.94 80.1
BAK Braskem SA Petrochemicals 10.89 5.92 N/A
TOT Total SA Oil Comp-Integrated 44.39 5.88 43.9
EOC Empresa Nacional de Electricidad SA/Chile Electric-Integrated 47.8 5.72 N/A
APSA Alto Palermo SA Real Estate Mgmnt/Servic 14.97 5.7 N/A
E ENI SpA Oil Comp-Integrated 40.14 5.47 52.8
FBR Fibria Celulose SA Paper&Related Products 6.53 5.17 N/A
FLY Fly Leasing Ltd Transport-Equip&Leasng 12.43 5.15 1886.38
BP BP PLC Oil Comp-Integrated 37.85 5.07 16.9
TMX Telefonos de Mexico SAB de CV Telephone-Integrated #N/A N/A 5.06 N/A
PUK Prudential PLC Life/Health Insurance 21.64 5 43.09
PSO Pearson PLC Multimedia 18.13 4.99 35.21
GSK GlaxoSmithKline PLC Medical-Drugs 44.43 4.94 71.43
TI Telecom Italia SpA Telephone-Integrated 9.31 4.93 N/A
CRH CRH PLC Bldg Prod-Cement/Aggreg 18.17 4.92 76.16
CHT Chunghwa Telecom Co Ltd Telecom Services 30.8 4.88 90
ENI Enersis SA Electric-Integrated 17.84 4.86 N/A
CIG Cia Energetica de Minas Gerais Electric-Integrated 16.94 4.56 87.97