I have a large portion of my dividend income sourced from international dividend stocks. In my view, there are several strong reasons to consider holding pure play foreign dividend stocks that can be invested in via ADRs (American Depository Receipts) or via stocks trading on the pink sheets.
1. The U.S. doesn’t account for the full universe of opportunities.The U.S. is undoubtedly the dominant global market. Still, it only represents half of the global stock market by value. Excluding foreign stock markets effectively excludes close to half of the global opportunities that are available to you as an investor.
2. Exposure to stronger economic growth. The markets of the BRICs (Brazil, Russia, India, and China) have experienced significant economic growth in the last few years, collectively growing in excess of 8% in 2010 and 6.5% in 2011. That’s significantly greater than the U.S. has experienced in this time.
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I’m a big fan of international investing. Beyond just dividend paying stocks, I also invest in international bonds that pay good dividends.
Good point. International bonds also have much higher yields on offer than what you can find in the US right now.
How do the taxes work on Int’l dividends? Are they qualified?
Depending on the location of the company, yes they can be qualified. I believe that any country that has a tax treaty with the US is treated as paying qualified dividends (includes Australia, UK etc). There are quite a few of these.
I think it will be good to consider international dividend for your portfolio. International companies have the higher yield on their dividends, which can be profitable for the investors.