Top 25 Spanish Dividend Stocks

Posted by David Hunkar on 24 April 2010, 6:22 pm

The IBEX 35 is the main stock market index of Spain. This index contains the 35 most liquid stocks traded on the Madrid Stock Exchange. In terms of performance, the IBEX 35 is down 8.6% year-to-date.

The IBEX Top Dvidendo Index includes the 25 companies with the highest dividend yield on the Spanish market. BBVA Asset management’s Accion IBEX Top Dividendo ETF(Ticker: BBVAT in the domestic market) tracks this index.

The constituents of the Accion IBEX Top Dividendo ETF are listed below together with their ADR ticker and the current yield if available:

1. Banco Sabadell SA (OTC: BNDSY)
2. Enagas (OTC: ENGGY)
Current Dividend Yield: 1.94%
3. Gestevision Telecinco SA (OTC: GETVY)
4. Ferrovial SA (OTC: FRRVY)
5. Bolsas Y Mercadoes Espanoles (OTC: BOLYY)
Current Dividend Yield: 2.87%
6. Criteria Caixa Corp (OTC: CIXPY)
7. Gas Natural SA (OTC: GASNY)
8. Fomento De Construcciones Contratas (OTC: FMOCY)
9. Acciona, SA
10. Endesa (OTC:ELEYY)
11. Iberdrola (OTC: IBDRY)
Current Dividend Yield: 4.84%
12. Grupo Duro Felguera
13. Miquel Y Costas
14. ACS. Activifades Const. Y Servicios (OTC: ACSAY)
15. Repsol (REP)
Current Dividend Yield: 4.95%
16. Telefonica (TEF)
Current Dividend Yield: 6.37%
17. Unipapel
18. Viscofan
19. Zardoya Otis
20. BBVA (BBVA)
Current Dividend Yield: 5.72%
21. Banco Espanol De Credito (OTC: BNSTY)
22. Banco Popular Espanol
23. Banco Santander SA (STD)
Current Dividend Yield: 8.90%
24. Mapfre (OTC: MPFRY)
25. Dinamia Capital Privado

Since most of the Spanish stocks mentioned above do not trade on the organized exchanges, US investors can get exposure to these and other top Spanish stocks via the iShares MSCI Spain ETF (EWP). The ETF has an asset base of $204M and contains 29 companies in the portfolio.Financials make up about 43% of the fund.

Household Debt, Gross Domestic Savings: China Vs. Other Countries

Posted by David Hunkar on 24 April 2010, 2:38 pm

The U.S. personal savings rate as a percentage of disposable income stood at about 4% at the end of 2009. The last time the savings rate exceeded 10% was in 1984. Compared to most other countries, the US has the lowest personal savings rate in the world.

Household debt as a percentage of GDP and Gross Domestic Savings as a percentage of GDP in China and other countries:

Click to Enlarge

The household debt is the third lowest and the savings rate is the highest in China.The Chinese have traditionally saved a large portion of their household income for the future since social security after retirement is non-existent in China. While high savings rate is good for the country in the long-run, in the short run domestic consumption remains weak as consumers save more their money instead of spending. Since the savings rate is high, it is a challenge for the Chinese government to convert the export-driven economy to domestic consumption based.

Unlike in the US, the concept of borrowing and spending is not readily accepted by most Chinese. Hence the number of credit cards in circulation is still very low in China. Compared to the US market, there were only 186 million credit cards in circulation in China at the end of 2009.This figure is very less since the population of China is much higher than the US and the Chinese middle class alone exceeds the population of the US. The credit card market in China is projected to grow at an annual rate of over 30% over the next four years. As a result of the low penetration rate of credit cards and culture, it is unlikely that increased spending will come from borrowed funds. Instead higher domestic spending will have to come from household savings or incomes.

Overall most Asian countries have lower household debt levels and high savings rates relative to the US and UK.

The Top 10 Credit Card Issuers in the World

Posted by David Hunkar on 24 April 2010, 7:09 am

The World’s Top 10 Credit Card Issuers based on year-end 2009 data are listed below:

1. Bank of America (BAC)

2. Chase (JPM) – Had 119.4 million cards in circulation in the US

3. Citibank (C) – Had 92 million cards in circulation in the US

4. American Express (AXP)

5. Capital One (COF) – Holds 6.95% of the US credit card market

6. HSBC (HBC) -Is the sixth largest issuer worldwide and holds just 2.05% of the US market

7. Discover (DFS) – Had 54.4 million cards in circulation

8. Wells Fargo (WFC) – Had 17.3 million cards in circulation

9.Â Barclays (BCS)

10. Llyods Group (LYG)

Source: Â CreditCards.com and Nilson Report, via CNBC

Except for HSBC, Barclays and Llyods, the rest of them are US-based issuers. While the US credit card issuers enjoyed great growth rates in the pre-credit crisis period, it remains to be seen how they would fare in the “new normal”.

Is the U.S. Stock Market Undervalued?

Posted by David Hunkar on 22 April 2010, 5:39 pm

According to David Rosenberg of money manager Gluskin Sheff the U.S. stocks market is overvalued by 35% based on Shiller P/E ratios.

The S&P 500 is up 9% YTD and most stocks have recovered strongly since the March lows of last year.The current P/E of S&P 500 is 21. However is this the time to invest in U.S. stocks?

According to an article in MoneyWeek, the current P/E of U.S. stocks is about 22. Historically when the P/E ratio exceeds 20, stock investments have lost money over the next five years. Investor Jeremy Grantham predicts a yearly return of just 0.40% for the next seven years. When inflation is taken into account investors will loose money if they invested in the markets now.

The above chart shows that stocks traded above 20 times earnings before the big crashes of 1929, the late 1960s and 2000.

Another chart from Societe Generale below shows that the cyclically-adjusted P/E of S&P 500 is over 20 now. This ratio is adjusted for economic cycles by taking an average of earnings over the past ten years.

Source: US equity bulls are pricing in Nirvana, MoneyWeek

The above charts confirm that U.S. stocks are not undervalued based on the factors noted. Further rise in equity prices have to accompanied by rise in earnings.

P/E ratios have been expanding in other markets as well though earnings have not grown significantly. For example, among the emerging markets, the P/E of BSE 500 stocks in India has shot up from 11.7 times (12-month trailing earnings) in March 2009 to over 20 last month. In 2009, when the total net profits of the BSE 500 companies grew by 30%, their market capitalization increased by 130% showing the irrational exuberance of investors.