High Dividend Stocks in Recession Markets

There is a recent article posted at Bloomberg that provides investors with some advice on things to do to keep a portfolio chugging along, even if we see a prolonged period of weak markets in North America. Among their suggestions are being weary of REITs and looking outside of the U.S. market by way of global mutual funds or index funds. Although they suggested some big name mutual funds, which as you know I am not a big fan of, they did suggest the Vanguard Total International Stock Index Fund as a way to cheaply invest internationally.

The article did suggest a couple of high dividend stocks that are outside of the U.S., including a Canadian one I have been monitoring but have not bought as I believe it is a priced a but rich at the moment (Manulife):

One school of investing says you will suffer less volatility and gain income through high-dividend stocks in tandem with bonds. Another desirable trait that could be added to that philosophy: established non-U.S. companies.

For now, a select group of dividend-growing non-U.S. stocks appears to have dodged the maelstrom triggered by subprime mortgage woes. Most are going about their business conservatively and are glad to reward investors with consistent dividends at reasonable share prices.

One example is Vodafone Group Plc, the world’s largest mobile-phone company. The stock has had a total return of 47 percent in the past year, and sports a dividend growth rate of 32 percent over the past half-decade and an estimated price-earnings ratio of 14.4, according to Bloomberg data through Aug. 31.

A similar company is Manulife Financial Corp., Canada’s largest insurer by assets, which has had a total return of 16 percent. With a P/E ratio of 14.6 and dividend growth rate of 25 percent, the firm has been untouched by the U.S. mortgage and housing meltdown.

I like this article because it is not something you see in the North American media. I beleive the media feels that if they suggest buying something other than a U.S. security they are alienating people. However, the name of the game in investing is risk management, and sometimes that is best achieved by looking at markets outside of our own.

• Sivy on Proctor & Gamble
• Sivy’s Definition of an Undervalued Stock
• Mutual Fund Returns Versus Individual Investor Returns
• My Top Performing Dividend Stocks
• Reinvested Dividends Comprised 41% of the Stock Market’s Total Returns