The Top 5 Foreign Dividend Stocks For 2012

By Robert Hauver

Which will be the best stocks to buy for dividends in 2012, foreign or US? Just like the dividend paying stocks in last week’s article,  The Top 5 US dividend stocks for 2012, the top 5 foreign dividend stocks for 2012 are ranked here by which ones will make the largest total cash payouts in 2012. This elite group contains firms from 5 countries, in these industries: oil majors, mobile phones, money center banks, and commodities producers. Two of these stocks are listed in our High Dividend Stocks By Sectors Tables :

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Dividend Growth Rate: Excepting financial stock HBC, all of these stocks have an impressive 5-year dividend growth rate. All of them also increased their 2011 dividends per share, except for Shell, which, however, just announced plans to increase its dividend in 2012:

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Projected 2012 Dividends: For the table below, we took the conservative route, and projected the same dividend payouts/share as in 2011.  However, given these firms’ strong earnings, low debt loads, and past dividend growth rates, it’s very probable that they’ll continue to increase their dividends in 2012. (There are 2 classes of Shell shares, while Billiton actually operates as 2 different companies, with different ticker symbols, and divergent prices, but reports as one economic unit. The cheaper BBL shares have a higher dividend yield than the BHP shares, since the dividends are the same.)

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Covered Calls: Interested in earning more income from these dividend paying stocks?  You might want to try selling covered call options, a strategy which gives you a second income stream that often pays you much more than dividends do, over the short term. The Sept. 2012 call options listed here for BBL and PTR both outpay their dividends by nearly 2 to 3 times during this 8-month term.

What’s the catch? Your shares of BBL and PTR may potentially be sold/assigned at their call strike prices, if the stocks rise above them near expiration in September.  In the BBL trade, you’re basically getting paid $5.90/share now, to make the bet that BBL won’t rise higher than its $70.00 call strike price.

In addition to the call option $, you’ll also collect the 2 semi-annual dividends, which have ex-dividend dates prior to the call option expiration date, provided that the shares don’t get called/sold away from you before the ex-dividend dates. However, if the shares do get assigned, you’ll also earn an additional $.97/share in this example- the difference between BBL’s 2/2/12 $69.03 share price, and the $70.00 call strike price.

(You can see additional details for these and 30 other trades in our Covered Calls Table.)

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Cash Secured Puts: Maybe you fell that PTR is too expensive at $148.90?  If so, you may want to sell cash secured put options below PTR’s current price, in order to achieve a much lower break-even price.

PTR closed at $148.90 on 2/2/12, but selling the Sept. 2012 $145.00 put option listed here will pay you $12.90/share now, and give you a break-even of $132.10, over 11% below PTR’s current $148.90 price.  As with selling covered call options, selling these put options will pay you over twice what the dividends pay during this 8-month term. However, unlike covered call sellers, put sellers never receive dividends.

The cash reserve equals the amount that your broker will hold in your account, so that you have enough funds to pay for the shares if they get sold/assigned to you. The cash reserve is equal to the put strike price times the amount of puts you sell, times 100. (One option contract corresponds to 100 shares of the underlying stock.) The main key to selling cash secured puts is to make sure you’d be comfortable owning the underlying stock at your break-even price, before you sell any puts.

(Note: You can find more info on these and over 30 other Cash Secured Puts trades in our Cash Secured Puts Table.)

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Earnings/Valuations: (* CCS EPS figure, which excludes the effects of oil price changes on inventory carrying amounts.)

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Financials: Like many other financial firms, HBC’s mgt. efficiency ratios got decimated in the financial crisis. BBL/BHP has the best mgt. ratios and operating margin in the group:

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Disclosure: Author is short BBL put options.

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Author: Robert Hauver © 2012 Demar Marketing All Rights Reserved