Dividend Payout Ratio: USA vs. Europe

The potential for European companies to raise dividend payouts is high since currently the payout ratio is lower than in the past according to a Allianz Global Investors report.

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Dividend Payout Ratio USA vs. Europe

From the report:

As earnings blossomed following the 2008 / 2009 financial crisis, the distribution ratios of companies have declined considerably. In Europe, the ratio of paid dividends to earnings per share is currently around 55 %, which is moderate by historical comparison. In the US, it is close to its lowest levels ever, at about 35% (see Chart 6).There is thus scope for dividend hikes.

Source: Dividend strategies in times of financial repression, Allianz Global Investors

How To Profit From Lower Oil Prices?

Oil prices have fallen to a four-year low and continue to fall with prices closing at $86.44 per barrel(Brent) yesterday for December delivery. One way to profit from lower oil prices is to invest in emerging market equities as they are major oil importers. According to one Deutsche Bank research report, Europe & Asia (excluding Japan) are projected to be the biggest beneficiaries from a growth perspective.

From the DB research report:

We estimate that a USD10 fall in the oil price with boost growth in Europe and Asia by 0.5 and 0.8 percentage points respectively.

From a trade perspective, Thailand, South Korea, Chile and the Ukraine will benefit most. Meanwhile Venezuela, Russia and Colombia will suffer on a relative basis given the large share of petroleum and petroleum product exports in these countries.

From a regional equity market perspective, we would expect markets such as the US, Canada and EM EMEA to under-perform relative to Japan and the Euro area given the larger energy exposure by market cap in these equity markets.

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Growth impact from lower oil prices

Winners and losers from low oil prices

Source: Commodity Themes In 2014, Deutsche Bank

Ten stocks from countries that benefit from lower oil prices are listed below for further research:

1.Company: Banco Santander-Chile (BSAC)
Current Dividend Yield: 3.60%
Sector: Banking
Country: Chile

2.Company: Empresa Nacional de Electricidad SA (EOC)
Current Dividend Yield: 2.06%
Sector: Electric Utilities
Country: Chile

3.Company:Philippine Long Distance Telephone Co (PHI)
Current Dividend Yield: 4.12%
Sector: Telecom
Country: Philippines

4.Company: HDFC Bank Ltd (HDB)
Current Dividend Yield: 0.65%
Sector: Banking
Country: India

5.Company: ICICI Bank Ltd(IBN)
Current Dividend Yield: 1.40%
Sector: Banking
Country: India

6.Company: Israel Chemicals Ltd. (ISCHY)
Current Dividend Yield: 8.13%
Sector: Fertilizers
Country: Israel

7.Company: POSCO (PKX)
Current Dividend Yield: 2.12%
Sector: Steel & Iron
Country: South Korea

8.Company: Nedbank Group Limited (NDBKY)
Current Dividend Yield: 4.33%
Sector: Banking
Country: South Africa

9.Company: Standard Bank Group Limited (SGBLY)
Current Dividend Yield: 4.34%
Sector: Banking
Country: South Africa

10.Company:Telekomunikasi Indonesia Tbk Perusahaan Perseroan (TLK)
Current Dividend Yield: 2.42%
Sector:  Telecom
Country: Indonesia

Note: Dividend yields noted above are as of Oct 28, 2014. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: No Positions

Emerging Markets Returns By Country From 2004 Thru 2013

Yesterday we looked at the comparison of US returns against other developed markets. In this post lets take a look at the emerging market returns by country over the past 10 years.

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Emerging Market Returns by Country Chart

Source: Henderson Global Investors

Note: The returns shown above are based on the country’s respective MSCI country index.

A few observations from the above chart:

Related ETFs:

Disclosure: No Positions

Periodic Table of Investment Returns: USA vs. Other Developed Countries From 2004 Thru 2013

The S&P 500 is up 6.3% year-to-date (YTD). In the past five years the index has more than doubled. Compared to the performance of the S&P 500, many of the developed market indices are in the negative territory so far this year.The returns of the some major markets YTD are listed below:

UK’s FTSE 100: -5.3%
France’s CAC 40: -3.9%
Germany’s DAX : -5.9%
Spain’s IBEX 35: 4.3%
Canada’s S&P/TSX Composite: 6.8%
Japan’s Nikkei: -6.1%

Considering the solid performance of the US markets in the past 5 years and relatively decent performance this year some investors may be tempted to stay away from investing in foreign developed markets. However past performance shows that the U.S. is always not the top performer among developed markets. In fact, the U.S. has only outperformed the other developed markets only twice (in 2011 and 2013) in the past 10 years as shown in the chart below:

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US vs Developed Market Returns Chart-Small

Source: Henderson Global Investors

Note:  The returns shown above are based on the country’s respective  MSCI country index.

A few observations from the above chart:

Related ETFs:

  1. iShares MSCI Australia ETF (EWA)
  2. Global-X Norway ETF (NORW)
  3. iShares MSCI United Kingdom ETF (EWU)
  4. iShares MSCI Canada Index Fund (EWC)
  5. SPDR S&P 500 ETF (SPY)

Disclosure: No Positions

Eurovision Song: Is It True by Yohanna

Source: EuroVision

Knowledge is Power: Brazil Election, Year-End Tax Moves, Yield Scarcity Edition

Rousseff or Neves? Brazilians Await Bad News Whoever Wins (Bloomberg)

The eurozone’s German problem (CER)

42 stocks that’ll thrive even if the economy gets worse (Financial Post)

Invesco Perpetual’s Mustoe: Why I’m betting big on Europe (FE Trustnet)

12 savvy year-end tax moves (Fidelity)

2020 Vision: Yield Scarcity and the Case for Dividends (Franklin Templeton Investments)

STOCKS FOR THE LONG RUN? (Evanson Asset Management)

4 Mistakes to Avoid in International Investing (Charles Schwab)

Can businessmen make good politicians? (The Hindu BusinessLine)

Why Don’t Germans Invest in Stocks? (Bloomberg BusinessWeek , 2010)

The Biggest Myths in Economics (Pragmatic Capitalism)

The Path to Becoming an Emerging Market (AllianceBernstein Blog)

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Near Central Park -Manhattan New York

Near Central Park, Manhattan, New York City