Filed Under:
Tickers in this Article: PHI, IXP, SMH, TEF, TSM
Recent trouble with the dollar has many Americans scrambling to find appropriate investments overseas. Their idea is to capitalize on two currencies and a rising global market. Below we list several companies with strong fundamentals, including very healthy dividends, a feature that many foreign shares possess in far greater quantity than their American counterparts.

IN PICTURES: Retire A Millionaire In 10 Steps

Dominant Market Position.
Philippine Long Distance Telephone Company (NYSE:PHI) has a price/earnings ratio of 11.9 and pays an annual 6.5% dividend. In the last year, the company's shares have been flat, versus a 4.5% return on the iShares S&P Global Telecommunications ETF (NYSE:IXP). IXP also pays a reasonable 5.0% dividend.

PHI controls roughly 60% of the fixed line market in the Philippines and 55% of the country's wireless subscribers. Two weeks ago the company's shares took a hit after it announced that third quarter earnings were flat, and it would be cutting jobs in an effort to increase EPS in coming quarters.

Asia Pacific
Taiwan Semiconductor Manufacturing Company, Ltd. (NYSE:TSM) is an interesting South Asian standout, currently paying 4.2% and carrying a P/E of just 11.6. The company produces semiconductors for use in a wide array of consumer products, from computers to automobiles to wireless communications devices. And given its access to a strong and growing consumer base in South East Asia, TSM stock should see continued strength ahead.

In the last year, the company's stock traded in a tight range and rose just 2.2%. That's a poor showing compared to the rest of the sector, as represented by the Semiconductor HOLDRs ETF (NYSE:SMH), which gained almost 17% over the same period. Over 20% of the company's shares are held by institutional investors - a very reasonable number for a listed ADR.

Telefonica S.A. (NYSE:TEF) is one of the world's largest telecoms, with a market cap of over $110 billion and an average daily trading volume of slightly under 650,000. The company now pays a dividend of 7.3% and trades with a multiple of 7.5 times last year's earnings. In the last year, the company's shares have taken a loss, but over the last six months, they're up 30%. Telefonica has produced a total return of over 1100% since it went public.

The Bottom Line
Foreign companies with high dividend yields and solid franchises are a great bet against a struggling dollar. Throw in the growth potential of emerging markets in Southeast Asia and Latin America, and you have the makings of some great investment returns. (By investing globally and trading locally, American depositary receipts offer the best of both worlds. Check out ADRs: Invest Offshore Without Leaving Home.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus

Trading Center