Top 50 German Companies in the U.S.

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One of the major impacts of Globalization in the past few decades is that large companies have become truly global and no longer depend on one country or territory to do business.The strong growth of Multi-National Companies (MNCs) confirms this phenomenon. American MNCs, for example, have established production facilities overseas and employ millions of workers there to meet the rising demand for their products and services. Similarly MNCs from other countries employ thousands of workers in the U.S. in order to cater to the U.S. market.

Traditionally European firms have been some of the largest investors in the U.S. contributing for a sizable chunk of the Foreign Direct Investment (FDI) coming into the country. Among European companies, German companies have a strong presence in the U.S. market.These German multinationals not only employ thousands of workers directly but also help create many more jobs indirectly.The contribution of these companies’ to the individual U.S. states where they have production facilities and to the overall U.S. economy in general is significant.

With 12.5 million people unemployed in the country as of August and most American firms still reluctant to hire, some of the German companies operating in the U.S. are actually expanding and adding workers. In fact, the top 50 German firms now create 461,000 jobs compared to 427,000 jobs in 2010. The sales performance of the companies also increased from $295 billion in 2010 to $318 billion last year.

The following table lists the top 50 German employers in the U.S. based on number of employees:

[TABLE=1068]

Source: German American Trade, May/June 2012, German American Chambers of Commerce

Due to the strong growth in the automotive industry, Daimler Group ranked the highest in the U.S. followed by Volkwagen Group based on sales. Siemens (SI) is the largest employer in the  U.S. with over 60,000 employees followed by Fresenius Medical Care(FSNUY), the world’s largest dialysis services provider with over 45,000 people. Some of the large German chemical firms such as BASF AG(BASFY), Linde (LNEGY), etc. also have a strong presence in the U.S.

Disclosure:  Long EONGY, HENKY

Top 15 U.S. Ports By Container Count

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The following table shows the Top 15 U.S. Ports by TEU Container Count based on data from 2010:

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Note: TEU – Twenty-foot Equivalent container Units

The World’s 10 Busiest Ports based on TEU Container Count are:

1.Hong Kong, China
2. Singapore
3. Pusan, So. Korea
4. Kaohsiung, Taiwan
5. Rotterdam, Netherlands
6. Shanghai, China
7. Los Angeles, CA
8. Long Beach, CA
9. Hamburg, Germany
10. Antwerp, Belgium

Source: U.S. Ports Analysis, Colliers International

 

Comparison of Dividend Yields between U.S. and Foreign Stocks

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Foreign stocks have traditionally had higher dividend yields than U.S. stocks due to a variety of reasons. While U.S. firms prefer to retain excess earnings for future growth companies in other countries tend to payout a higher portion of earnings to investors in the form of dividends. In some countries such as Australia favorable tax treatment of dividends also encourages firm to payout more.

The current yield on the S&P 500 is 2.06%. For many years the dividend yield on the S&P 500 has stayed around 2%. Compared to this rate many foreign countries have much higher dividend yields.

The following chart shows the dividend yield by country as of the end of July and comparison of yields between U.S. and foreign stocks over a 10-year period:

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Source: International Dividend Sustainability Portfolio 2012-13, Invesco

Over a 10-year period ending July 2012, foreign stocks based on the MSCI EAFE index yielded on an average about 1% more in dividends than U.S. stocks as represented by the S&P 500 index.

Ten foreign dividend stocks having more than 3% dividend yields are listed below for further research:

1.Company: CorpBanca (BCA)
Current Dividend Yield:
Sector: Banking
Country: Chile

2.Company: Telefonica SA (TEF)
Current Dividend Yield: 8.92%
Sector: Telecom
Country: Spain

3.Company: DBS Group Holdings Ltd (DBSDY)
Current Dividend Yield: 5.42%
Sector: Banking
Country: Singapore

4.Company: Companhia Energetica de Minas Gerais Cemig (CIG)
Current Dividend Yield: 13.00%
Sector: Electric Utilities
Country: Brazil

5.Company: Administradora de Fondos de Pensiones Provida SA (PVD)
Current Dividend Yield: 7.42%
Sector: Investment Services
Country:Chile

6.Company: Philippine Long Distance Telephone Co (PHI)
Current Dividend Yield: 4.22%
Sector: Telecom
Country:Philippines

7.Company: Fortum Oyj (FOJCY)
Current Dividend Yield: 6.42%
Sector: Utility
Country: Finland

8.Company:Enersis SA (ENI)
Current Dividend Yield: 3.46%
Sector: Electric Utilities
Country: Chile

9.Company: Enel Spa(ENLAY)
Current Dividend Yield: 8.55%
Sector: Utility
Country: Italy

10.Company:Telenor ASA (TELNY)
Current Dividend Yield: 4.24%
Sector: Telecom
Country: Norway

Note: Dividend yields noted are as of September 14, 2012

Disclosure: Long ENI, BCA

Interdependence between Advanced and Developing Economies

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The decoupling theory implies that the economic growth of emerging countries do not depend on developed countries.This theory failed miserably during the global financial crisis when markets around the world declined simultaneously. In fact emerging markets fell much more than markets in the developed world. In today’s globalized economy, emerging and developed countries are highly dependent on each other. Hence economic growth in the emerging countries is dependent on advanced economies and vice versa.

The following chart shows the strong cyclical interdepence of emeriging and developed economies:

Source: Convergence, Interdependence, and Divergence by Kemal Dervis, Finance and Development, September 2012, IMF

The IMF article notes that since the Asian crisis of 1997-98 interdependence between the two groups of countries has actually become stronger. In addition, linkages among developing countries has also become stronger. For example, trade between Brazil and China is growing at a much faster rate than trade between Brazil and U.S. Hence a reduction in China’s raw material consumption adversely affects the Brazilian economy as commodities form the largest component of Brazil’s exports to China.