5 Robust Foreign Yields for 2013
Here are five robust yield plays from outside of our borders that trade in the U.S. that can help your portfolio produce more income.
Since World War II, buyers of German luxury sedans have had an easy choice. There's been Mercedes-Benz--and everyone else. Well, these days, the venerable auto maker faces major competition from brands such as BMW, Audi and Porsche. Still, it's a very lucrative business for all the major firms, as profit margins on luxury automobiles are far higher than the margins generated by economy cars.
To be sure, the European economic crisis spooked many investors that have been anticipating an utter implosion in the European auto market. As a result, shares of Germany-based Daimler (DDAIF) , parent company of Mercedes-Benz, had fallen from the low $70's in early 2011 to the mid-$40's. Yet the sales weakness has mostly been confined to the economy-focused brands such as Peugeot, Fiat and Opel, and Daimler's shares have recently rebounded back into the $50's.
Worried about an eventual dividend cut? That looks unlikely. Daimler did indeed slash its payout from $2.56 in 2007 to just $0.77 in 2008. Yet has been the case with every economic slowdown in the past, this dividend always comes back stronger. Daimler re-upped its dividend to $2.81 in 2011. Frankly, this dividend looks fairly solid right now, even in the face of tremendous economic challenges. Analysts expect Daimler's per share profits to rise roughly 5% in 2013 to around $6 a share, and expect the dividend to remain at current levels. That works out to a dividend yield in excess of 5%, among the highest of any auto maker in the world.
Though European governments are being forced to cut back on a range of social services, they can't afford to skimp on infrastructure. Clean drinking water and up-to-date wastewater treatment plants are deemed essential, which ensures a steady flow of contracts for this builder and operator of water plants.
France-based Veolia Environnement(VE) has spent the past few years shedding non-core assets in a bid to pare a debt load that had grown too large. Those asset sales are largely complete, and the company's current size and cash flow enables it to produce roughly 75 to 90 cents in dividends per share each year. That works out to be a yield in the 6% to 7.5% range. Analysts currently are targeting that 90 cents figure for 2013, which would make this one of the highest-yields you can find in the area of water infrastructure.