Highest Dividend Stocks Today…Companies Outside the US!

Will the US economy grow or not? Does the US economy now have "sustainable growth legs"…with 200,000 new jobs per month and a modest retail spending rise? Don’t be too hopeful, modest US growth is only a phenomenon of 4 years of Zero interest rate stimulus, and 4 years of $1.5 Trillion budget deficit spending…not "natural growth legs". This fiscal deficit stimulus has created US Government debt of $15 trillion equal to 100% of GDP (See GDP Table below.) Further, there are no Congressional or Presidential initiatives for 2012 to shrink the current year’s deficit whatsoever. So, it’s Up, Up and Away…above $15 Trillion for this year.

This deficit/monetary policy stimulus is not sustainable for the long term. We clearly see the deficit troubles of these policies in Southern Europe now. Ironically, the US enjoys a unique luxury or privilege of having a Federal Reserve Central Bank that can print all the money needed to pay off foreign creditors of US Govt debt. This has artificially given the US a "AAA" credit rating in that it has "no shortage of US dollars" to pay off interest or principal on its US dollar debt. Absurd as that sounds, Moody’s and S&P cite the ability of the US to print dollars as the criteria to service all interest and principal payments on its dollar sovereign debt. As such, the US cannot technically default, and hence gets "AAA".

Who knows how long the US Govt debt bubble will last? With the US dollar being a "Reserve Currency" to the world, the expansion of the US money supply is near limitless. For the past 4 years, the US government deficit has been an engine of 2% of the 4-5% of global GDP growth rate. US deficit spending that stimulates US imports of goods and energy, actually stimulates other countries’ economies, more than the US.

The US economy has recently expanded at a rate of only 2% a year (1.7% average real GDP growth for past 10 years). Without this annual deficit spending, the US would be experiencing a negative GDP contraction and rising unemployment…both politically-unacceptable. Yet, intractable budget deficits are politically-acceptable! This "lame economic condition" of the US, with deficit-stimulated meager 2% annual growth, appears better though than a US double-dip recession. The open-ended concern is "how long can 10% budget deficits persist" before US government debt has a blow-up in international markets, such as European sovereign debt was experiencing? In essence, we have a US debt bubble building, and bubbles have unpredictable bursting points. We think it is time to shift to equities of other countries.

The US economy is only 23% of a $63 Trillion global GDP; we are a minor economic power. Corporate stock dividends in the US average only about 2% yields now, basis the S&P 500 index. Estimated annual GDP growth across the US, EU and Japan…major developed countries…is only 1-2% for this year and next. These 3 country regions equal a staggering 60% of global output or GDP. As such, there will be little reduction in developed-country unemployment rates, nor much growth in household incomes for more than half the world’s GDP economies. The most recent upward 25% spiral in gasoline prices will significantly dampen discretionary consumer spending in the US.

Considering the growth-impaired conditions of the US, Southern European countries and Japan, plus the US government debt spiral, we recommend that investors hold more international high dividend equities. You should look to many of the non-US multinational companies based out of more fiscally responsible countries, where dividend yields are more than double US equity yields. These countries & regions include: Canada, Australia, Brazil, Australia, So. Korea, China, Northern EU countries, Skandis and Switzerland. Click here for 25 high dividend non-US stock recommendations

Country Est. 2011 GDP (millions of US$)
    World $63,170,000
  European Union 17,720,000
1. United States 15,060,000
2. China 6,989,000
3. Japan 5,855,000
4. Germany 3,629,000
5. France 2,808,000
6. Brazil 2,518,000
7. United Kingdom 2,481,000
8. Italy 2,246,000
9. Russia 1,885,000
10. India 1,843,000
10. Canada 1,759,000

Is the European Stock rally for Real? The European Union looks to be stabilizing and stock markets have turned up, especially for Germany with its $3.6 Trillion GDP economy, which is about half the size of China’s $7 trillion economy. The bull market catalyst is massive European Central Bank liquidity injections of $1.5 Trillion to banks on 3 year terms. EU commercial banks are now buying the Sovereign Bond Debt that no one wanted just a few months ago and using same for Tier 1 capital to support corporate lending. Looks like "free money" does talk!

Will this benign condition last, or just breathe some temporary life into the Northern European equity market rally? At face value, the new ECB lending facility is perhaps a "super Band-Aid" to buy time. Yet, we do think that the foundation of this new super liquidity initiative is sound. Why? Because the majority of the 27 EU countries are buying into and supporting constitutional measures to drive every member EU country (Other than the UK, which opted out.) to set a course of government budget deficit reduction and structural business/employment growth initiatives. Unlike the US and Japan that are ignoring government budget deficit reform, the EU hardball country players, Germany, France and Netherlands are pushing all members to at least reduce govt deficits to no more than 3% of GDP. And that is certainly a "safer harbor" than the US with its 10% budget deficit.

The Southern periphery countries are the "most damaged" from the govt debt binges since Eurozone formation in 1999 thru about 2008. Spain, Portugal, Greece, Ireland and to a lesser degree Italy will be in a "growth struggle" in 2012 and 2013 to bring their public sector deficits down without causing too much annual GDP contraction. All-in-all across the whole 27 country EU region, we think that they will have a "soft landing" on deficit reduction, renewed banking sector liquidity health, and hopefully achieve average GDP growth of about 1% in 2012 and 2013. Selected high dividend common stocks of multinational firms in the Northern Countries should be rewarding on dividends and share price gains to patient investors. "Click here for 20 high dividend EU stock recommendations"

Where does global central banker money expansion go? Will it bring sustainable global economic growth, or just commodity & energy price inflation? It is a little of both now, yet much of the "low interest rate loan benefits" across the US, EU and Japan are going to corporate capital formation in new energy development, power conversion and industrial automation investments. Debt-financed automation capital equipment is cheaper than hiring high wage human capital. Some US companies are reversing from "foreign out-sourcing" to "domestic in-sourcing" and adopting more productivity equipment to minimize US, EU or Japanese labor payroll expansion. Hence, US manufacturing job growth is secularly challenged by automation.

We think that the "global money expansion" is going to boost investments in raw materials, energy commodities and natural resource investments because the "developing country world" has fast rising populations and household incomes. Demand for these resources will grow and so will profits in these sectors. Capital equipment companies will continue to boom in output to create productivity-enhancing machines…China labor costs are rising. Therefore, buying high dividend industrial, natural resource and infrastructure stocks will be rewarding.

Natural Gas Price Collapses…Crude Oil Soars This is driving huge visions & plans for nat gas (NG) being a near term transportation motive fuel, replacing some gasoline and diesel demand. Big money will be earned on investments in the growth of "volume transportation and compression/conversion of NG" as it replaces diesel and gasoline as motive fuels. Industrial, fertilizer, chemical, and heat-process manufacturing companies will all benefit. We are recommending a broad range of NG pipeline and processing MLPs, plus industrial, chemical and fertilizer companies benefiting from lower cost NG feedstock materials and lower heat-processing expenses.

President Obama recently announced that he would be offering tax incentives for the companies that invest in NG powered vehicles. Auto/truck manufacturers are starting the design and production process of NG vehicles. Today, 2012 heavy-duty pickup trucks are now retro-fit with compressed NG tanks for dual-fuel usage.

Given the current state of low NG prices and increasing volume in this industry, the following dividend paying companies should be able to benefit in this environment. (Below are the Company Names, Stock Tickers and Income distribution yields to shareholders.)

  • Markwest Energy (MWE) (5.2%)
  • Sunoco Logistics Partners (SXL) (4.6%)
  • Williams Partners (WPZ) (5.2%)
  • Spectra Energy Partners (SEP) (6.0%)
  • Cheniere Energy Partners (CQP) (7.3%)
  • Teekay LNG Partners (TGP) (6.5%)
  • Linn Energy (LINE) (7.3%)
  • Vanguard Natural Resources (VNR) (8.4%)
  • Terra Nitrogen (TNH) (7.98%) • Golar LNG (GLNG) (3.3%)
  • Dupont (DD) (3.1%)
  • Dow (DOW) (2.9%)
  • Eastman Chemical (EMN) (2.0%)
  • Sherwin Williams (SHW) (1.5%)
  • Alstom (ALSMY) (1.5%)
  • Exterran Partners (EXLP) (8.5%)

Summary: The entire energy industry will be impacted by historic low NG prices and new record proven US supplies. The potential winners are discussed above to give you an education on how to invest in this industry via exchange-traded companies that pay out high dividend income yields.

Special Balanced Portfolio Illustration for CMA Investor Update readers…

CMA Investor Update is illustrating a "balanced portfolio illustration" that holds 50 securities across the 5 asset classes we discuss regularly: High Dividend Common Stocks, REIT shares, MLP shares, Preferred shares and Corporate Bonds. The allocation is 40% equities (common stocks) and 60% Fixed Income (Preferreds and Corporate Bonds). All securities trade on public exchanges in the US via electronic brokerage accounts. Click here to view this Balanced Account Illustrated portfolio.

Other asset classes (See Below) are highly important to assure consistency of high annual portfolio income returns, and to achieve lower income tax benefits from using more tax-efficient equity investment types.

"High Investment Income…Is a River for Predictably Building Wealth".

First, Corporate Bonds have current interest yields now at 6-8% from callable bonds versus the US 10-year Treasury bond at just 2% yield. That is triple the return. Corporations, in general are in their best fiscal conditions now in terms of "cash on balance sheet", they have high multiples of cash flow to debt service, and generally are experiencing steady earnings growth via cost reduction and productivity investing. You should be utilizing corporate bonds.

If you are very risk-adverse, then stay in the "investment grade category" of long term maturity and callable bonds that are trading at about "par pricing" with an average yield range of 6% to 6.5%. Corporations are smarter in financial management than many countries today! According to Moody’s corporate debt credit analysis over the past 40 years, corporate bonds have only a one-twentieth of a percent annual default risk. CMA uses the many listed "CORTS" corporate-bond-backed New York Stock Exchange traded bonds. All trade under tickers with $25 par original issued unit values. “Click here for 5 bond recommendations in this sector”

A second asset class for high annual predictable yield are Preferred Stocks that are issued in $25 par value share units by hundreds of companies having varying "investment debt quality rankings". All trade NYSE and preferred issuers have contractually committed quarterly fixed dividends in a range of 6% to 9%. These corporate issues span almost all the economic sectors, other than technology companies. “Click here for 5 preferred stock recommendations in this sector”

"US stock indexes, 11 years without positive return…US preferred stocks, 11 years with near 8% annual dividend returns."

The Master Limited Partnership (MLP) asset class focuses on about 100 prominent publically-traded businesses covering the entire US natural gas, coal, crude oil and other natural resource industries. MLP companies "do not" pay any corporate income tax, they are "flow-through" entities. The investor shareholders receive from 4% to 12% in annual MLP distributions that are classified by the IRS as "return of capital" and are hence State and Federal tax-free to the holder. “Click here for 5 MLP recommendations in this sector”

"300,000 US miles of underground energy pipelines…Earn 7% tax-free income from MLP portfolios. "

The Real Estate Investment Trust (REIT) universe of hundreds of publically-traded commercial property companies is an immense asset class. These companies typically specialize is sector-specific income-earning property types. These include: Office, Industrial & Distribution, Hotels, Health Care, Managed Care, Storage, Shopping Centers and Multifamily Apartments. Timber REITS (PCL) make their money by growing and harvesting timber for lumber, pulp and high valued fibers products, plus capital gains from legacy property acreage sales. REITs pay a range of from 3% to upwards of 12% in annual distributions. Some of the distribution is "tax-free" return of capital to shareholders. “Click here for 5 REIT recommendations in this sector”

Economic Sectors Summary…

The Global economy today is very challenged. Investment opportunities abound though, especially for relatively safe high yield returns, as noted in Sector-specific "global high dividend stocks".

Economic Sector InfoBar

Click on a sector icon above to read our thoughts regarding that particular sector.

CMA Investment and Allocation Recommendations

There are 10 principle global Economic Sectors that cover all investing areas of the global economy. All 10 are discussed below with "fast click navigation" along the "Sector InfoBar" above

By Clinking on any Sector Icon, you read the definition About a Sector, CMA’s Recommendations Pro & Con about investing in a Sector, and get 5 Top High Dividend Stock Picks within a favored Sector. Please note CMA’s recommended percent weighting for each.


Energy Sector

Comprises companies whose businesses are involved in the following activities: The construction or provision of oil rigs, drilling equipment and other energy related service and equipment, including seismic data collection. Companies engaged in the exploration, production, marketing, refining and/or transportation of oil and gas products, coal and other consumable fuels.

Our Recommendation: Weight 25%

Massive central bank liquidity and Zero interest rates is supportive to future global GDP growth and causes rising energy usage demand for crude oil, nat gas and coal. Growing global population…now at 7 billion… and household income growth in developing countries, grows energy fuels demand (Crude oil, coal and natural gas). "Slow" recovering energy demand growth will occur in the U.S., Japan and Europe, now primed by central banks to backstop recovery from past recession after 2012.

Energy will continue to see 1-3% growth with faster growth coming out of the emerging economies offset by lower growth by developed economies. Oil will continue to remain as the primary fuel for transportation, yet natural gas may become a major motive fuel. Coal continues to power electrical plants due to its large abundance. Even though China has vast resources of coal, this is being used quickly and the country has been utilizing resources from Australia and now the U.S. to meet its growth demands. Continued low prices for natural gas will replace coal for electric generation and oil for transport fuels via LNG & propane usage.


Materials Sector

Encompasses a wide range of commodity-related manufacturing industries. Included in this sector are companies that manufacture chemicals, construction materials, glass, paper, forest products and related packaging products, and metals, minerals and mining companies, including producers of steel.

Our Recommendation: Weight 10%

Prolonged Zero interest rates and ample monetary liquidity is a sustainable catalyst for infrastructure growth and commercial properties development that use large quantities of building materials. We see a modest upswing in late 2012 in production growth of manufactured goods and capital equipment in the wake of renewed global GDP growth coming off a reduced 2012 3-4% global GDP rate. This will turnaround demand expectations for metals, timber, chemicals, plastics, steel, cement and packaging materials into 2013. Prices for most materials will still have a secular upward bias due to the explosive growth in China, Brazil, India, and global money supply expansion. Brazil should especially see growth in materials demand for infrastructure as it nears the 2016 Summer Olympics.



Industrials Sector

Includes companies whose business activities in the manufacture and distribution of capital goods, including aerospace & defense, construction, engineering & building products, electrical equipment and industrial machinery. The provision of commercial services and supplies, including printing, employment, environmental and office services. The provision of transportation services, including airlines, couriers, marine, road & rail and transportation infrastructure.

Our Recommendation: Weight 15%

Prolonged low interest rates stimulate automation and productivity equipment investments to replace human labor component. Multinational companies are doing this on a grand scale to "do more with less employees" to cut costs and expand profits. Low short-term interest rates make selling-company vendor financing easier to offer to customers to grow industrial sales. High-quality multinational industrial company borrowers can create shadow banking activities by offering attractive vendor financing terms. Caterpillar and Deere have done that for decades. Rising inflation from expansive global monetary ease has a 94% positive correlation to rising industrial corporate earnings and dividend growth.

Despite the global slowdown of 2008-2009, the industrial sector continues to profit with many of the U.S. domiciled companies now receiving 30-40% or more sales from overseas. While the use of the internet may have had a negative impact on some services like postal shipping and mass shipping, it should continue to have a positive effect on those logistic companies that ship one-off goods like UPS, Fedex, and Deutsche Post.


Consumer Staples Sector

Comprises companies whose businesses are less sensitive to consumer economic demand cycles. It includes manufacturers and distributors of food, beverages and tobacco and producers of non- durable household goods and personal products. It also includes food & drug retailing companies as well as hypermarkets and consumer super centers.

Our Recommendation: Weight 10%

Consumer necessities of life are non-cyclical and consumer spending is stable. As consumers back off on discretionary spending as the global growth rate stays week thru 2012, more cash will flow to higher quality staples product spending. Rising consumer confidence from new central bank monetary stimulus will positively excite higher quality, higher valued, consumer staples purchases. Shoppers can move upscale from Wal-Mart and Target shopping constraints.

The increases in income in developed countries continue to provide a long term stimulus to the consumer staples companies as consumers move up from generic to branded products. Not unlike Utilities and much of Healthcare, historically, the Consumer Staples area has provided a fairly steady level of income along with relatively low volatility, but this area also has provided growth in profits and dividends.


Telecom

Companies that provide communications services primarily through a fixed-line, I-Phone, cellular, wireless, high bandwidth and/or fiber optic cable networks.

Our Recommendation: Weight 20%

The iPhone and mobile Internet are now an essential service to all consumers and businesses worldwide. These are utility-type businesses in a growth industry setting. Telecom operators will see a return to subscriber growth and telecom pricing power. Developing-world household income growth and geographical remote "tele-access" needs are driving rapid growth in rural wireless subscribers and in content for I-phones, and more web-access features.

While core telephone companies have taken the impact of reductions in long distance charges and reduced income from telephone directories over the past 20 years, they continue to deal with residential phone subscriber losses, and to a limited extent, business losses. In most cases though, most of these telephone companies have offset these losses with increasing internet data subscribers, wireless subscribers and most recently the move into cable/satellite services.


Utilities Sector

Encompasses those companies considered electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power to consumer, commercial and public sector customers.

Our Recommendation: Weight 10%

A return to stronger global economic growth by 2013 improves power consumption growth. US and Europe should see a stable to improved GDP upside to bring back less restraint in electric power usage demand. Power usage demand correlates very closely to recovering GDP growth rates. US utilities may not see much upside on earnings, as low nat gas cost must be passed along to consumers and businesses.

Utility stocks have outperformed growth stocks in 2011. Utility stocks have normally been a core holding in dividend stock portfolios due to their consistency of income. Due to the regulated nature of their business, those core gas, electric, and water utilities or oil/gas pipeline companies are fairly stable while the power producers can be more cyclical given the unregulated nature of these businesses. Given the recent situation in Japan, there has been a move by many countries to lessen their exposure to nuclear. In addition, environmental lobbies have made it more expensive to use coal and oil for energy production so those power companies that use cleaner and low cost natural gas, hydro, wind, solar should be able to continue to prosper if they are outside regulated markets in the US.


Consumer Discretionary Sector

Encompasses those industries that tend to be the most sensitive to consumer economic demand cycles. Its manufacturing segment includes automotive, household durable goods, textiles & apparel and leisure equipment. The services segment includes hotels, restaurants and other leisure facilities, media production and services, and consumer retailing and services.

Our Recommendation: Weight <5%
Consumers remain in expense lock-down in U.S. and Europe and household debt deleveraging in U.S. and Southern European countries weakens consumer discretionary spending strength. Even with an anticipated GDP recovery in late 2012, consumers will more likely pay off more debt with rising household incomes…and attempt to save more. While we are underweight this sector, there are many good companies with solid dividend yields and growth potential that are in the Consumer Discretionary area including Genuine Parts, Yum Brands, Target, McDonalds, Home Depot, Electrolux, Shaw Communications, Foot Locker, and Hennes & Mauritz. Low nat gas costs in US will lower household heating and electric expenses to give somewhat of a boost to consumer spending tendencies.


Healthcare Sector

Encompasses two main industry groups. The first includes companies who manufacture health care equipment and supplies or provide health care related services, including distributors of health care products, providers of basic health-care services, and owners and operators of health care facilities and organizations. The second regroups companies primarily involved in the research, development, production and marketing of pharmaceuticals and biotechnology products.

Our Recommendation: Weight <5%
Governments are over-regulating health care, and government budget balancing efforts attack or reduce public healthcare entitlement benefits in U.S. and Southern European nations especially. Healthcare companies are in a major "indecision state flux" on business strategy, while the politics within the industry are unsettled on government healthcare programs. While government issues tend to hurt the sector occasionally, the Healthcare sector has historically been fairly safe while seeing some moderate growth in profits and dividends. The majority of dividend payers in this sector are in the pharmaceutical area, and developing countries may see higher spending on pharma when global GDP growth gets back above 4%.


Financials Sector

Includes companies whose business activities in the manufacture and distribution of capital goods, including aerospace & defense, construction, engineering & building products, electrical equipment and industrial machinery. The provision of commercial services and supplies, including printing, employment, environmental and office services. The provision of transportation services, including airlines, couriers, marine, road & rail and transportation infrastructure.

Our Recommendation: Weight <5%
All large banking institutions are exposed in the same way: Too much in bad small business, residential and consumer loan assets, plus deteriorating credit quality in Southern Europe sovereign debt assets, and banks have a rising insolvency risk as sovereign debt default risks may still loom, as potential hits against their capitalization. Best credit quality big companies go direct to credit markets…lower quality borrowers are stuck going thru banks for funding.


Information Technology Sector

Covers the following general areas: firstly, Technology Software & Services, including companies that primarily develop software in various fields such as the Internet, applications, systems, databases management and/or home entertainment, and companies that provide information technology consulting and services, as well as data processing and outsourced services; secondly Technology Hardware & Equipment, including manufacturers and distributors of communications equipment, computers & peripherals, consumer electronic equipment and related instruments; and thirdly, Semiconductors & Semiconductor Equipment Manufacturers.

Our Recommendation: Weight <5%

Pricing power on IT equipment is non-existent today; hence profit growth is not sustainable. IT and personal electronics sales unit volumes may grow, yet unit product pricing is in a secular long-term downtrend. Unit volume growth in consumer electronics and IT devices is slower than unit selling price deflation…a No Win!…except for the consumer. So, the weighting to IT is fairly low just due to the number of companies that are available in this area. We are using some of the semiconductor companies including Intel, but are also utilizing payment processors, software companies like Microsoft, and hardware companies including Ericsson, Nokia, and service solution companies like IBM.

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All securities recommended in Investor Update have risks of market fluctuation in prices, and unforeseeable general economic and company issuer events that influence the values of stocks, REITs, MLPs, preferred shares, corporate bonds and any other like kind public company issued securities.