Go Global: Best Bets in ADRs

10/13/2014 9:00 am EST

Focus: STOCKS

Charles Carlson

Editor, DRIP Investor

I maintain all investors should have some exposure to international markets. If your investments are exclusively US stocks, you are greatly limiting your global fishing pond for stock opportunities, argues Chuck Carlson, editor of DRIP Investor.

Sure, there are US companies that do a lot of business overseas and those multinationals provide some overseas exposure for investment portfolios.

However, market returns of US-based companies have a strong correlation to the returns of the broad US market.

Owning stocks headquartered around the globe has been shown to boost portfolio diversification by gaining correlations to stock markets other than the US.

Of course, owning international stocks does not guarantee you will outperform US stocks every year. US stocks have outperformed developed and emerging market stocks in recent years.

But this has not always been the case, as there have been numerous periods in my 32 years of following the markets when international stocks, as a group, outperformed US equities.

It is extremely easy for any US investor to buy individual foreign stocks via American Depositary Receipts (ADRs).

ADRs are securities that trade on US exchanges and represent ownership in shares of foreign companies. Investors buy and sell ADRs just as they buy and sell US stocks.

ADRs are quoted in US dollars and pay dividends in US dollars. And those dividend payments, in many cases, receive the current preferential tax treatment afforded qualified dividends paid by US companies.

The number of ADRs offering DRIPs has grown dramatically since I first started as a DRIP Investor in 1992; we now follow more than 225 ADRs across 38 countries. Below are our current favorites.

Argentina:
BBVA Banco Frances (BFR)

Belgium:
Anheuser Busch InBev (BUD)

Bermuda:
Marvell Technology (MRVL)

Brazil:
Banco Bradesco (BBD)
Braskem (BAK)
Companhia Bras. Distr. (CBD)
Companhia Paranaense (ELP)
Embraer (ERJ)
Itau Unibanco (ITUB)

Chile:
Banco De Chile (BCH)
Banco Santander Chile (BSAC)

China:
Baidu (BIDU)
Huaneng Power Int'l (HNP)
NetEase (NTES)
PetroChina (PTR)

Colombia:
BanColombia (CIB)

Denmark:
Novo Nordisk A/S (NVO)

Germany:
Fresenius Medical Care (FMS)
Infineon Technologies (IFNNY)

Hong Kong:
China Mobile (CHL)
China Unicom (CHU)

India:
Dr. Reddy's Labs (RDY)
Infosys Technology (INFY)
WNS (WNS)

Ireland:
Eaton (ETN)
Ingersoll-Rand (IR)
Ryanair (RYAAY)

Israel:
Teva Pharmaceutical (TEVA)

Japan:
Honda Motor (HMC)
Komatsu (KMTUY)
Kubota (KUBTY)
Toyota Motor (TM)

Mexico:
America Movil (AMX)
Fomento Economico (FMX)
Grupo Televisa (TV)

Netherlands:
Koninklijke Philips Elec. (PHG)

Norway:
Statoil ASA (STO)

South Korea:
KB Financial (KB)

United Kingdom:
ARM Holdings (ARMH)
BHP Billiton (BBL)
British Sky Broadcast (BSYBY)
Smith & Nephew (SNN)
Vodafone Group (VOD)

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