ADRs of European Companies
American depositary receipts, or ADRs, are the best way to access international investing. These essentially are stand-in shares for a stock that trades on a foreign exchange — but you get the ease and liquidity of trading on the NYSE or Nasdaq. What’s more, the top tier of ADRs must adhere to U.S. GAAP standards — filing a 20-F annually and following 6K rules for any shareholder disclosures just like the bluest of the domestic blue chips. Some of the top ADRs you might want to consider are:
- French energy giant Total (NYSE:TOT). This oil and gas company pays a nearly 4% dividend (semiannually, however) and could benefit from a broad global recovery and increasing crude oil demand in the years ahead, as well as a euro zone rebound. There are a lot of ways to play oil and get a dividend, but Total’s $115 billion market cap gives you some stability if you’re leery of other European options right now.
- Spain’s Telefonica (NYSE:TEF) is a telecom powerhouse that also offers a plump dividend twice a year. Based on previous payout rates of around 85 cents, that gives investors a great annualized yield of around 9%! Like domestic telecoms, Telefonica might not have breakneck growth ahead — but income like that and the prospect of a value buy amid euro zone negativity could work in your favor with a great dividend stock like TEF.
- Switzerland’s Novartis (NYSE:NOV) is a health care powerhouse that has seen 10 consecutive quarters of year-over-year revenue increases. It pays an annual dividend of around 3.7% based on historical data, and its focus on generics, vaccines and emerging markets could pay off down the road.
European Pink Sheets
While euro zone stocks that trade as ADRs have a significantly higher daily volume and stricter SEC oversight than those that trade on the pink sheets, don’t count out these thinly traded OTC stocks.
Take food products giant Nestle (PINK:NSRGY), one of the biggest consumer brands in the world that trades as a pink sheet. Nestle pays dividends once a year, typically in April, and the payout has been sweetened 15 years in a row to a current yield of more than 3%. Even over the counter, Nestle trades more than 500,000 shares daily — so it’s more liquid than some “legitimate” stocks on domestic exchanges.
Other Europe stocks aren’t as liquid. Dairy giant Danone (PINK:DANOY) only trades about 100,000 shares. But they also can provide opportunity if you do your homework.
Jeff Reeves is the editor of InvestorPlace.com. Write him at email@example.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.