It’s one of the market’s biggest missed opportunities. Every day, millions of U.S. investors looking for more income are missing out.
That’s because the vast majority of the world’s highest-yields aren’t found in the United States.
As the Chief Strategist of High-Yield International, my job is to scour the globe for the world’s highest yielding investments and tell my readers about them each month. At last count, my research shows that over 79% of the world’s highest-yielding stocks are based in international markets.
[ad#Google Adsense 336×280-IA]If you’re like most people, then you’ve probably never taken advantage of foreign stocks.
That’s a shame, because the average stock in the United Kingdom yields 3.8%, Australia’s average yield is 4.5% and New Zealand pays 4.3%.
By contrast, U.S. stocks yield less than 2%, on average.
Most U.S. investors dismiss the idea of investing abroad.
They tend to think other countries are “riskier” than the United States.
But that’s not always the case. Especially with one special country I’ll tell you about in a moment, where average yields are double those found in the United States.
A Safer Way To Invest In Today’s Highest Yielding Stocks
In the past couple of years, America’s total debt load has topped $18 trillion. That burden is projected to grow even larger, reaching a total of $22 trillion by 2020, according to projections by the Congressional Budget Office.
Like a taxi meter spinning faster and faster, we are slipping $2 billion deeper into the hole every day, at a rate of roughly $80 million per hour.
Now compare that to a country like Australia.
From the mid 1990s through 2007, the Australian government steadily paid down its debts, reducing the nation’s debt-to-GDP ratio to less than 12%.
Although Australia took steps to help stimulate its economy amid the financial crisis, the government kept spending under control. As a result, Australia’s public debt-to-GDP ratio is still just 29% — several times lower than the United States’ debt ratio of around 100%.
But what’s more, amid all the pain caused by the Great Recession, Australia has truly lived up to its nickname the “Lucky Country.” It avoided recession entirely and emerged from the global downturn largely unscathed.
Throughout the entire economic slowdown, Australia’s GDP only experienced a single quarter of negative economic growth, and that was at the height of the financial crisis in 2009. The country’s growth quickly reaccelerated to a 3% clip in 2010.
That’s part of the reason Australia is one of only nine countries that still sports a perfect “AAA” credit rating by all the major ratings agencies. (The United States is not one of those nine.)
Yields Two Times Higher Than U.S. Stocks
Australia is much more than just a safe place for your money. The country also offers some of the highest yields on the planet.
The average dividend yield of all stocks on the Australian Stock Exchange stands at 4.5%, more than double the 2% average yield offered by stocks in the S&P 500.
Take ASX Ltd. (OTC: ASXFY) for example, Australia’s equivalent to the Nasdaq OMX Group, Inc. (Nasdaq: NDAQ), which runs the Nasdaq exchange.
ASX is Australia’s largest and most dominant financial exchange. It clears millions of dollars in stock and derivatives trades every day. But while the Nasdaq pays a yield of 2%, ASX pays a yield of 4.1% — a 105% premium to the Nasdaq.
It’s the same story with Westpac Banking Corp. (NYSE: WBK), one of Australia’s largest banks.
Most U.S. large banks pay dividends. Bank of America Corp. (NYSE: BAC), for example, pays a 1.2% yield. The best yield in the industry comes from JPMorgan Chase & Co. (NYSE: JPM), which pays 2.4%. But even that pales in comparison to Westpac’s 5.5% yield — a 130% premium to JPMorgan’s yield.
But Australia is by no means the only country that offers safe, fat dividend yields like these.
The fact of the matter is there is simply a much stronger dividend culture abroad. Individual investors play a larger role in those markets, and they have always demanded more dividends.
Don’t get me wrong, I don’t recommend putting your entire portfolio into international high yielders. But I think most U.S. investors are unaware of what they’re missing. Put simply, if you want to earn the most income possible, then you have to start considering international income stocks.
Good investing,
Michael Vodicka
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Source: Daily Dividends