With the Federal Reserve deciding to keep interest rates where they are, investors looking for income are still up the creek without a paddle. With that in mind, dividend stocks continue to be a great draw for investors. The only problem is that with the markets being up so much, many dividend stocks aren’t exactly spitting out a ton of yield these days. The SPDR S&P 500 ETF Trust (NYSE:SPY) — which tracks the benchmark S&P 500 — is currently only yielding 1.9%.
The secret to finding great dividend stocks isn’t to look in the United States, but to break out your passport.
The best-yielding dividends stocks could be found overseas. The international markets feature plenty of multinational muscle that comes with higher yields and potentially cheaper valuations. For investors looking for income, thinking global with your portfolio could offer plenty of benefits.
With that said, here are five great international stocks to buy today for strong dividends.
Great International Dividend Stocks to Buy Today: Diageo (DEO)
Dividend Yield: 2.5%
What do Captain Morgan rum, Smirnoff vodka and Johnnie Walker Scotch have in common (aside from being tasty)? Well, they happen to be the leading spirits in their respective categories, and the chief products of one of the best dividend stocks around — the U.K.’s Diageo Plc (ADR) (NYSE:DEO).
But Diageo’s boozy empire doesn’t stop at just these three. It encompasses a whole range of beer and spirit brands. And until recently, DEO was the largest booze company in the world by volume, sales and operating profits. That title now belongs to China’s Kweichow Moutai.
Even still, DEO’s vast empire spans 180 different countries and 29 category-leading brands.
And that fact has continued to drive profits and revenues at the firm. For its last interim results back in January — U.K. stocks only report earnings twice a year — DEO reported a 14.5% boost to its sales and a 28% jump in profits. This resulted in a sharp increase in free cash flows for the period and follows DEO’s long streak of wins.
Investors have been winning as well. All of those free cash flows have made their way back to investors pockets. During the period Diageo managed to up its payout by another 5%. Today, the stock yields 2.5%.
Great International Dividend Stocks to Buy Today: Total SA (TOT)
Dividend Yield: 5.1%
When we think of the major oil companies as dividend stocks, names like Chevron Corporation (NYSE:CVX) often dominate the conversation. However, Europe is full of some big-time energy stocks that pump out major dividends as well. One of the best happens to be France’s Total SA (ADR) (NYSE:TOT).
TOT is nearly as big as CVX in many regards and features numerous assets across the world. That includes everything from major oil fields to pipelines and refining capacity. But the real win is that Total’s management knows just what to do with those assets.
And that has included stepping off the gas at just the right time — before the recent oil crash — and hitting the pedal to the metal just before the rebound. That has allowed the firm to report some pretty decent earnings over the last few years. Moreover, its management has been tight with CAPEX spending and has increased its cash balance to more than $25 billion.
These efforts and its profits have helped pay for its hefty 5.1% dividend.
And with higher crude oil prices on the horizon, Total could be one of the first energy firms to really increase their dividends by a meaningful amount.
Great International Dividend Stocks to Buy Today: The Toronto-Dominion Bank (TD)
Dividend Yield: 3.3%
Do you want high-yielding banks with strong balance sheets? Then the dividend stocks for you aren’t in America, but up North … and one of the best could be Toronto-Dominion Bank (NYSE:TD).
The key is that TD has focused more on you and me, rather than big-time business clients. That’s important because competition for more prominent clients has brought down many of the lucrative fees that banks charge large companies for using their services. That’s not so for retail customers, and TD can realize greater margins on retail accounts that are sometimes much higher than wholesale business banking.
Additionally, Toronto-Dominion has expanded into other banking operations. This includes brokerage firms — it owns TD Ameritrade and recently offered to buy Scottrade. Again, trading and custodian fees are pretty darn lucrative.
For TD’s investors, that mean that bank has become a profit and dividend champion. The bank has managed to grow its shareholder returns at a CAGR of 15.9% over the last five years. And it has been sending more of those profits back to investors. Toronto-Dominion has grown its payout by 11% annually since 1995.
This makes TD one of the most consistent dividend stocks in the world.
Great International Dividend Stocks to Buy Today: British American Tobacco p.l.c. (BTI)
Dividend Yield: 3.1%
While rates of smoking are falling in the developed world, in the emerging world, cigarettes are as cool as ever. And that’s great news for investors looking for dividend stocks like British American Tobacco PLC (ADR) (NYSEMKT:BTI). The firms received the vast bulk of their revenues from emerging-market nations like China and India. Furthermore, growth in the emerging world help offset any declines here at home. In fact, BTI sold over 12% more of its products last year.
But BTI is about to sell even more. That’s because it’s offered to finish buying up the rest of rival Reynolds American, Inc. (NYSE:RAI) that it didn’t already own. The $49 billion buyout will create the world’s largest tobacco firm by a long shot and place strong brands like Camel, Lucky Strike, Newport and Pall Mall under one roof. Even better is the buy gives BTI a hefty dose of next-generation tobacco products and e-cigarettes.
While the deal is expensive, it gives BTI investors another way to grow their dividends and instantly add to overall profits.
And speaking of those payouts, BTI is a monster. While the amount fluctuates since it is tied to a percentage of profits, it has been paid twice a year, year in and year out. Currently, BTI yields 3.1%
Great International Dividend Stocks to Buy Today: iShares International Select Dividend ETF (IDV)
Dividend Yield: 4.3%
Perhaps the best way to get some exposure to international dividend stocks is to own them all — or at least a big swath of them. And the easiest way to do that is the iShares Dow Jones EPAC Sel Div Ind (ETF) (NYSEARCA:IDV).
IDV tracks the Dow Jones EPAC Select Dividend Index — which is a measure of high-dividend-paying equities in non-U.S. developed markets. The intentional dividend ETF tracks high-paying equities and screens for those that have consistently paid those dividends over longer periods of time. That currently creates a portfolio of 99 different non-U.S. stocks — like pharmaceutical firm AstraZeneca PLC (ADR) (NYSE:AZN) and previously mentioned Total SA.
This focus on long-term dividend payers helps IDV offer a high yield itself. The ETF currently pays around 4% — roughly double what the S&P 500 is currently paying.
Returns for IDV have been pretty decent as well. Over the last five years, the fund has had an average total return of 5.2%. That’s pretty darn good for an international stock fund. Helping is IDV’s low 0.5% expense ratio.
In the end, when it comes to international dividend stocks, IDV is the best broad play for them all.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.
