Favorite Foreign DRIPs

08/25/2015 10:00 am EST


Charles Carlson

Editor, DRIP Investor

It is never a bad idea to look in all corners of the market—including internationally—to find opportunities. Indeed, successful investing starts with keeping your fishing pond as broad as possible, advises Chuck Carlson, editor of DRIP Investor.

It’s estimated that overseas stock markets account for well over half of the global stock market, so ignoring international stocks shrinks your opportunity set dramatically. Furthermore, adding international investments to a portfolio can improve diversification in many cases.

Mutual funds and exchange-traded funds certainly are two investment vehicles that allow overseas investing. But investors who like to invest in individual stocks, including DRIPs, have many stocks from which to choose.

More than 200 foreign stocks allow any US investor to buy their shares directly— the first share and every share—without ever having to call a broker.

You are not buying shares on a foreign market. Rather, you are buying foreign companies who list their American Depositary Receipts on US stock exchanges. ADRs are quoted in US dollars and pay dividends in US dollars.

Two I especially like right now are based in Ireland, Ryanair (RYAAY) and Shire (SHPG). Ryanair is Europe’s only ultra low cost airline. The firm operates more than 1,600 daily flights connecting 190 destinations in 31 countries.

As Europe continues to see economic improvement, demand for airline services should grow. The stock has performed well over the last 12 months but has further upside potential. Shire is a leading pharmaceutical firm.

The company is best known for its products to treat attention deficit hyperactivity disorder. The firm acquired NPS Pharmaceuticals earlier this year.

Shire recently raised its full-year earnings guidance. I expect Shire to handily outperform the S&P 500 index over the next 12 months.

Shire is not the only attractive healthcare ADR. Long-time favorites include Novo Nordisk (NVO), the Denmark-based leader in diabetes treatments and Fresenius Medical (FMS), the Germany-based provider of dialysis services and treatments.

Both of these companies focus on healthcare markets with sizable growth prospects and offer solid long-term appreciation potential.

The action in the China equity markets is creating some interesting opportunities in some of the more seasoned companies in that part of the world.

Two worth considering are Baidu (BIDU) and China Mobile (CHL). Baidu is considered the “Google of China.” The stock’s recent price tumble is presenting an attractive buying inlet.

China Mobile stock operates the world’s largest mobile network with the world’s largest mobile customer base totaling more than 800 million users. The stock, yielding nearly 3%, offers good total-return potential.

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