Germany’s Major Trading Partners 2018

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The following chart shows the major trading partners of Germany based on 2018 data. The top export market for Germany is the U.S. followed by France and China. In terms of imports, the major country for imports into Germany is China. The US ranks 4th as the major import source country.

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Source: De Statis

China and the US are the only two countries outside of Europe that are major trade partners of Germany.

Germany has a trade deficit with the US as it exports more to the country than it imports.

 

U.S. vs. European Stock Returns

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The U.S. equity market as represented by the S&P 500 has performed very well this year with a return of 17.2% so far based on price return only. When dividends are included the returns will be a bit slightly higher. The returns on the index over the 5 and 10 year period is also very good. Ever since the Global Financial Crisis(GFC) of 2008-09 American equities have enjoyed a strong bull market.

On the other hand, European stocks have languished year over year. Since the GFC, they have under-performed their US peers by a wide margin to say the least.

Let’s take a quick look at the returns of these markets using an ETF as a proxy. The SPDR S&P 500 ETF (SPY) mimics the S&P 500 while the SPDR STOXX Europe 50 ETF (FEU) mirrors the Stoxx 50 index which is the benchmark for European markets including the UK.

The following chart shows the returns of the two ETFs in the past 5 years:

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In the past five years, FEU is in the negative territory. But SPY has had an excellent run with returns of over 55%.

The following chart shows the returns of the two ETFs since April 1, 2009 (approx. trough of GFC):

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Source: Yahoo Finance

While the SPY has shot up by over 235%, its European equivalent has had a tiny gain of only 28%. The gap in returns is indeed astonishing.

Why European stocks have poorly performed relative to their American peers?

Some of the reasons for the awful performance of European stocks are: lackluster European economic growth, dithering politicians and regulators more interested in drama than substance, lack of swift policy actions, lack of focus on growth by firms, too many political and economic crises wasting time and resources, meager innovation in many industries, etc.

It remains to be see if European stocks stage a comeback in the next 5 years or so bringing joy to equity investors.

Related ETFs:

  • The SPDR S&P 500 ETF (SPY)
  • The SPDR STOXX Europe 50 ETF (FEU)

Disclosure: No Positions

The Top 20 Countries for Foreign Direct Investment 2018

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The Top 20 Countries for Foreign Direct Investment (FDI) in 2018 is shown in the chart below. The figures for 2017 is also shown for comparison purposes. Even with a reduction in FDI in 2018, the US is the largest recipient of FDI in the world. China is the next top country for attracting FDI dollars. Though China ranks 2nd, the wide gap in FDI between the US and China shows how the US is well built for foreigners to invest their capital.

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Source: The World Investment Report 2019 , UNCTAD

Among the developing countries, China tops the list followed by Brazil and India.

10 Foreign Stocks That Offer Attractive Dividend Yields

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American investors looking for income stocks can consider going abroad for investment opportunities. While the US equity market offers decent dividend yields, foreign stocks have better yields. So instead of purely focusing on domestic stocks, adding overseas companies not only provides additional yields but also diversification benefits to a well built portfolio.

Though investors are subjected to unique risks with foreign dividends such as currency exchange risks, dividend withholding taxes, political risks, etc.  it is possible to come out ahead by owing overseas stocks. For example, the Australian equity market offers more than double yield of the US market. So despite the issues mentioned above investors can generate a substantial higher yield from owning Aussie stocks.

The following chart shows the dividend yields of major foreign markets/regions:

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Note: Data shown is 2019 estimates as of 6/30/19

Source: Rethinking Your Income Strategy? by Michael Ordonez, Thornburg Investment Management

Ten foreign dividend stocks to consider for further research are listed below with their current dividend yields:

1.Company: Royal Bank of Canada (RY)
Current Dividend Yield: 4.02%
Sector: Banking
Country: Canada

2.Company: BCE Inc (BCE)
Current Dividend Yield: 4.92%
Sector: Telecom
Country: Canada

3.Company: National Grid PLC (NGG)
Current Dividend Yield: 5.73%
Sector:Multi-Utilities
Country: UK

4.Company: Telstra Corp Ltd (TLSYY)
Current Dividend Yield: 4.79%
Sector:Telecom
Country:  Australia

5.Company: Eni SpA (E)
Current Dividend Yield: 6.35%
Sector: Oil
Country: Italy

6.Company:Equinor ASA (EQNR)
Current Dividend Yield: 5.43%
Sector: Oil
Country: Norway

7.Company: Bancolombia SA . (CIB)
Current Dividend Yield: 2.46%
Sector: Banking
Country: Colombia

8.Company: DBS Group Holdings Ltd(DBSDY)
Current Dividend Yield: 4.90%
Sector: Banking
Country: Singapore

9.Company:Commonwealth Bank of Australia (CMWAY)
Current Dividend Yield: 5.65%
Sector: Banking
ountry: Australia

10.Company: Novartis AG (NVS)
Current Dividend Yield: 3.32%
Sector: Pharmaceuticals
Country: Switzerland

Note: Dividend yields noted above are as of Oct 9, 2019. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: Long RY