Income investors have it pretty bad right now. Despite a recent spike, the 10-year Treasury note yield of 2.3% is near an all-time low.
Those low bond yields have pushed income-starved investors into the S&P 500 in search of reliable dividend stocks. Unfortunately, their options are slim...
After a 70% gain in five years, the S&P 500's dividend yield has compressed to 1.92%, also near an all-time low. Take a look below.
If you're one of those investors banging your head against the wall trying to find better yields, I have the solution for you. You might be surprised to learn that a huge collection of high-yield stocks is right at your fingertips.
However, in order to capitalize on this opportunity, you have to be willing to overcome one of the biggest investor biases.
The Bias Keeping U.S. Investors From The Best Yields In The World
Home Bias is the tendency for investors to invest heavily in domestic stocks despite the potential benefits of diversifying into international equities. According to research from mutual fund company Oppenheimer, U.S. stocks make up over 70% of U.S. investors' equity portfolios.
Not only is this home bias bad for diversity -- the US economy accounts for just 25% of the global economy -- but it's crippling for income investors. More than two-thirds of the world's best dividend stocks were outside the United States in 2014 and 2015.
That's because the majority of the world's highest yields aren't being paid by U.S. companies. The 105 additional stocks out there yielding 10% or more are all coming from international-based companies. Sticking to U.S. companies is like going out to dinner and only looking at one section of the menu.
Here's more good news. It's never been easier or more affordable for U.S. investors to invest in international stocks. Most of these high yielders are offered on U.S. exchanges as ADRs (American Depository Receipts) or through over-the-counter (OTC) markets. The cost to buy and sell these stocks is the same as buying and selling blue-chips such as Apple and Google.
To help you get started I have compiled a list of my favorite high-yield international stocks. This list is filled with billion-dollar industry leaders offering the richest, most reliable dividends in the world.
If you're looking to pump up your dividends, this is a good place to start.
7 Foreign Stocks Yielding Up To 8.7%
|Company||Ticker||Country||Forward Yield (%)|
From this group, I have chosen to highlight Student Transportation and Westpac Banking because of their long dividend histories and high yields.
Student Transportation (Nasdaq: STB) operates school buses in Canada and the United States. If you're looking for a reliable dividend payment, this is the place to be. STB has a long and reliable dividend history, paying a monthly dividend since 2005. Today, STB offers a dividend yield of 7.46% -- more than a 250% premium to the S&P 500.
Westpac Banking (NYSE: WBK.CL) is one of the largest banks in Australia with a market cap of $85 billion. Westpac has been paying a dividend for more than 35 years. Today, Westpac offers one of the only bank dividends in the world that dwarfs its U.S. competition. Westpac's current yield 5.25% is more than a 100% premium to JPMorgan's 2.37%.
Risks To Consider: If bond yields move higher in 2017 I expect that may pull some capital out of dividend stocks and into fixed-income securities.
Action To Take: Income investors looking to pump up their yield need to overcome home bias and start looking at international stocks. As you can see, this group offers yields that dwarf their U.S. counterparts.
Editor's Note: We like boring. Why? Because we've found some cash cows that are virtual snooze-fests... real sleepers here... yet they repeatedly deliver yields like 10.4%... 12.1%... and even 15.1%. Discover how to quietly collect dividend checks that steadily increase in value... without being slashed apart in turbulent markets.