Category Archives: Global Investing

Is there investment opportunities in the UK?

Investment managers have expressed confidence that shareholder payouts from major UK and US companies will increase in the year ahead.

According to S&P Capital IQ, the JOHCM UK Equity Income Fund has predicted that dividends will grow by around 5 per cent in 2013, M&G’s Charifund has estimated an uplift of between 5 per cent and 6 per cent, and the Standard Life UK Equity High Income Fund has plumped for between 6 per cent and 7 per cent.

Bob Shearer, co-manager of the BlackRock North American Income Trust, concurred about the outlook for the US. ‘We believe that dividends will continue to grow,’ he said. ‘We have seen a large commitment from management teams given the need for income in the US, an aging population, and lack of available yield elsewhere.’

Within the rosy overall picture, though, investors on both sides of the Atlantic have been advised to buy income stocks discerningly. There is always fixed rate savings for a long term investment.

‘Forecasts for dividend growth next year are complicated by the issue of special dividends,’ noted Daniel Vaughan, fund analyst at S&P Capital IQ. ‘A key stock in this debate is Vodafone (LON:VOD), whose dividend accounts for 10 per cent of the historical FTSE All-Share dividend yield. Much of the cash payment stems from a special dividend payment passed on from the Verizon (NYSE:VZ) business.’

Vodafone has targeted an annual dividend hike of 7 per cent for the year to March 2013, and researcher Digital Look has calculated that its dividend yield will be above 7 per cent for the next two years. However, this is dependent on Verizon, which distributed £2.9 billion to Vodafone in January and is set to pass on another £2.4 billion before the end of the year. 

In the US, Shearer commended the information technology sector but warned on the prospects for healthcare and financial firms. ‘While these sectors are important from a dividend perspective,’ he acknowledged, ‘structural headwinds and underlying regulatory pressures remain.’

One of the fund’s top holdings is IBM (NYSE:IBM), which presently yields a meagre 1.7 per cent but is scheduled to boost this by more than 6 per cent a year.

The Best Places Worldwide to Invest Your Money

We are truly living in a global economy. Multinational corporations aren’t even “multinational” per say, because they do not have many nationalities – most have one gigantic global presence. Think Google, Microsoft, Apple – these are companies that set up shop from pole to pole, and they’re all reaping the rewards of casting their nets so wide.

Regular investors like you and me should take a page from this playbook and diversify our portfolios too, if we can. First, of course, you should take care of the biggest investments – you retirement, education for your kids, your emergency fund. Then, once you’ve locked down those things, it’s time to start looking at ways to up your returns by any means possible.

Think as the corporations do – take your money global and reap the rewards. Some places in the world are better to invest in than others; just look at the disastrous effects of the European Union’s Greek euro fiasco. The currency is expected to tank, and these are the kinds of minefields you’ll want to avoid when planning your overseas investment strategy. You should make sure to do your homework and scout out the best places worldwide to invest your money. Here are a few resources to get you started.

A Core Foreign Fund Could be Just the Ticket

Don’t try this at home, folks: If you want to start investing in foreign markets, then you need to have a qualified financial advisor by your side to hold your hand through the process. Ask about opening something simple to get yourself started, such as a core foreign fund.

You need to sink the majority of your dough into holdings with a fund that has the ability to track a very broad index of stocks in developed markets. If you’re looking for one particular index, consider the dependable option of the Fidelity Spartan International Index (FSIIX). When you pick this stock index, you will be investing most of your money in Australia, Western Europe, and Japan. This move got the kiss of approval from Money magazine, so it’s worth a look.

Throw a Little into Emerging Markets

Let’s take a case study as an example. One fabulous performer, Yum Brands (YUM), is the parent company of American favorites such as Pizza Hut, Taco Bell, and KFC. It’s likely you have all three of these not even a few miles from your house, right?

Well, believe it or not, they’re not just in the United States – In fact, Yum rakes in more than half of its annual revenue from its stake in emerging markets, and it’s actually one of a very limited number of companies in the S&P 500 to pull this off so successfully. A rep from Morgan Stanley even noted recently that for anyone who may be interested in parking their bucks in global growth, Yum is a no-brainer. If you’re going for individual overseas investments in emerging markets, try to choose companies with a similar track record to round out your portfolio.