10-08-2014, 11:01 AM
I agree with what earthtodan said ... "Domestic companies that report in dollars but sell overseas are still taking big hits in currency translation."
I don't specifically look for foreign securities and the vagaries of different countries tax laws, reporting requirements and the local culture of "cooking the books" tolerance does add to the risk. When I do venture into foreign stocks, I look for the large, familiar, international names; Unilever, BHP Billiton, BP, Nestle, ScotiaBank, etc. These are the companies that get plenty of eyeballs at their operations and you can get major brokerage reports with numbers that make sense since they, for the most part, are writing for the U.S. investor. Many of them already trade on U.S. exchanges.
If you're looking for companies to become partners with just because of currency or location diversity and protection, I think it's a canard. I look for companies that are quality companies in their field and can offer a solid investment over the long term. Currencies go up and they go down. Over the long term, that appears to average out, in my opinion.
For instance, I have holdings in BNS (Canada), RCI (Canada), BBL (UK) and UL (UK). Over time, and BNS/RCI are the only ones I've held for a long enough period to note the effect of currency, the dividend payments bounce up and down with the exchange rate but the overall trend has been up. We'll see with BBL and UL although I think both companies are worthwhile investments.
I have shied away from some such as UN (Netherlands, I believe), TOT (France) even though they appear to have some merits and are large, international companies because of the tax consequences last I looked. Since my holdings are in an IRA, I cannot get the foreign tax credit.
Finally, I agree with this statement: "As a result, I believe that adding internationally listed stocks would not dramatically improve the performance of a dividend portfolio." If we're talking stocks that only trade overseas and not on the U.S. exchanges, then we are wholly in agreement. However, if your choice is between say Bank of America or Royal Bank of Canada, which would you rather hold for the next 30 years? For me, the choice is clear.
I don't specifically look for foreign securities and the vagaries of different countries tax laws, reporting requirements and the local culture of "cooking the books" tolerance does add to the risk. When I do venture into foreign stocks, I look for the large, familiar, international names; Unilever, BHP Billiton, BP, Nestle, ScotiaBank, etc. These are the companies that get plenty of eyeballs at their operations and you can get major brokerage reports with numbers that make sense since they, for the most part, are writing for the U.S. investor. Many of them already trade on U.S. exchanges.
If you're looking for companies to become partners with just because of currency or location diversity and protection, I think it's a canard. I look for companies that are quality companies in their field and can offer a solid investment over the long term. Currencies go up and they go down. Over the long term, that appears to average out, in my opinion.
For instance, I have holdings in BNS (Canada), RCI (Canada), BBL (UK) and UL (UK). Over time, and BNS/RCI are the only ones I've held for a long enough period to note the effect of currency, the dividend payments bounce up and down with the exchange rate but the overall trend has been up. We'll see with BBL and UL although I think both companies are worthwhile investments.
I have shied away from some such as UN (Netherlands, I believe), TOT (France) even though they appear to have some merits and are large, international companies because of the tax consequences last I looked. Since my holdings are in an IRA, I cannot get the foreign tax credit.
Finally, I agree with this statement: "As a result, I believe that adding internationally listed stocks would not dramatically improve the performance of a dividend portfolio." If we're talking stocks that only trade overseas and not on the U.S. exchanges, then we are wholly in agreement. However, if your choice is between say Bank of America or Royal Bank of Canada, which would you rather hold for the next 30 years? For me, the choice is clear.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan