7 Foreign Oil Stocks Yielding Over 4% Dividends

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Ever since the Deepwater Horizon oil spill billions of dollars have been wiped out from  the market cap of BP. The stock price is down about 44% year-to-date. Currently BP has a dividend yield of 11.51%.

From the Journal’s story titled “BP Should Resist Slashing Dividend “:

“Following Tuesday’s letter signed by 31 members of Congress calling for BP to suspend dividends, the company’s stock, yielding 11%, now appears priced for a deep cut. Yet there are good reasons why BP should resist these demands, at least for now. The consensus estimate for BP’s operating cash flow this year is $34 billion. Capital expenditure and acquisitions swallow $28 billion and dividends another $10.5 billion, leaving a deficit of $4.5 billion. Even then, year-end net debt would be about $31 billion, equating to 22% of total capitalization.

BP’s target “gearing” ratio is up to 30%, implying extra debt capacity of about $17 billion. That is about the same as the top end of the first year’s pretax cleanup costs estimated in the Credit Suisse report cited in the congressional letter. So BP can likely handle the costs without touching dividends.”

Despite the low stock price and high yield, many investors are likely to stay away from BP until the picture gets clearer.There are too many known unknowns such as legal costs, liability limit issues, claim costs, dividend cuts, political pressures, etc.

Many other foreign oil companies have been beaten down in recent weeks due to the BP disaster. This presents some good opportunities to pick up high quality stocks in this sector.

The following seven foreign oil stocks have dividend yields of more than 4% as of June 10, 2010:

1. YPF SA (YPF)
Argentina
Current Dividend Yield: 7.48%

2. Ecopetrol SA (EC)
Colombia
Current Dividend Yield: 4.57%

3. Petrobras Energia SA (PZE)
Argentina
Current Dividend Yield: 4.93%

4. Statoil ASA (STO)
Norway
Current Dividend Yield: 4.59%

5. Repsol YPF SA (REP)
Spain
Current Dividend Yield: 6.36%

6. ENI SpA (E)
Italy
Current Dividend Yield: 6.85%

7. Total SA (TOT)
France
Current Dividend Yield: 6.88%

The 10 Largest and Most Liquid Chinese Companies

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In order to identify the largest publicly-listed Chinese companies I used the S&P/CITIC China 30 index.

This index “covers the largest, most liquid Mainland Chinese companies with listings outside of Mainland China, providing foreign investors exposure to China’s growing economy.  The index is representative of listed blue chip Chinese enterprises, and is drawn from the entire universe listed H Shares, Red Chips, P Chips, N Shares and ADRs listed on the Hong Kong, Singapore, New York and NASDAQ stock exchanges, and can be traded without restrictions by all investors.”

The components of S&P/CITIC China 30 index have an avergage market cap of about $11.5B. The top 10 stocks account for about 75% of the market cap share.

The Top 10 components of the  S&P/CITIC China 30 index based on market cap are:

1. China Mobile (CHL)
Current Dividend Yield: 3.97%

2. Industrial & Commercial Bank of China (OTC: IDCBY)
Current Dividend Yield: 3.34%

3. China Life Insurance (LFC)
Current Dividend Yield: 0.80%

4. Bank of China (OTC: BACHY)
Current Dividend Yield: 4.19%

5. China Construction Bank (OTC: CICHY)
Current Dividend Yield: 1.55%

6. CNOOC Ltd (CEO)
Current Dividend Yield: 3.26%

7. Petrochina Co (PTR)
Current Dividend Yield: N/A

8. Tencent Holdings (OTC: TCEHY)
Current Dividend Yield: 0.28%

9. China Petroleum & Chemical (SNP)
Current Dividend Yield: N/A

10. China Shenhua Energy (OTC: CSUAY)
Current Dividend Yield: 1.78%

Falling Euro Set To Benefit German Exporters

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The US dollar has strengthened against the Euro in the past few months. The Euro trades at 1.19 to the dollar today. In 2008, the exchange rate reached nearly 1.60. One theory suggested by some fund managers to support the case for investing in Europe is that the falling Euro should help euro-zone exporters as their products become cheaper. As Germany is the largest economy in Europe and also has the largest export oriented-economy, German exporters would benefit from a cheaper Euro.

From a press release today:

“According to provisional data of the Federal Statistical Office (Destatis), Germany exported commodities to the value of Euro 75.3 billion and imported commodities to the value of Euro 61.9 billion in April 2010. Hence, German exports increased by 19.2% and imports by 15.7% in April 2010 against April 2009.”

Factory orders rose 2.8% in the month of April suggesting exports is picking up as domestic demand is weakening.

germany-exports-imports.gif

Last year Germany exported goods worth 803.2 billion euro and imported goods worth 667.1 billion euro creating a foreign trade  surplus of 136.1 billion euro. 63% of all goods were exported to EU countries in 2009 and the rest to other parts of the world. Asia accounted for about 14% of German exports.

In order to identify the largest German companies based on revenues I used Fortune magazine’s Global 500 list for 2009. Some of these German companies are listed below with their ADR ticker and current dividend yield:

Volkswagen(OTC: VLKAY)
Current Dividend Yield: 2.62%

Daimler (OTC: DDAIF)
Current Dividend Yield: 1.27%

E.ON (OTC: EONGY)
Current Dividend Yield: 6.54%

BASF (OTC:BASFY)
Current Dividend Yield: 4.38%

RWE AG (OTC: RWEOY)
Current Dividend Yield: 6.71%

Bayer (OTC: BAYRY)
Current Dividend Yield: 3.34%

Continental (OTC: CTTAY)
Current Dividend Yield: N/A

Siemens (SI)
Current Dividend Yield: 2.59%

Henkel (OTC: HENKY)
Current Dividend Yield: 1.75%

Deutsche Telekom AG (DT)
Current Dividend Yield: 9.41%

ThyssenKrupp AG (OTC: TYEKF)
Current Dividend Yield: 1.67%

BASF (OTC: BASFY) is the largest chemical company in the world. Siemens(SI) has a strong presence in many emerging markets. Henkel (OTC: HENKY) is a consumer products giant whose brand portfolio includes some of America’s best-known brands such as Dial soaps, Purex laundry detergents,  Right Guard antiperspirants and Loctite adhesive.

Since most of the firms noted above trade on the OTC markets, another easy way to gain exposure to German equities is via the iShares MSCI Germany Index ETF (EWG) or the closed-end fund The New Germany Fund (GF).