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Calling Germany Collect

11/03/2009 1:12 pm EST


Neil George

Editor, Profitable Investing

Neil George, editor of By George and Stocks That Pay You, recommends two dominant—and generous—utilities.

RWE (OTC: RWNFF, RWEOY) and Deutsche Telekom (NYSE: DT, OTC: DTLSF) are two of the biggest businesses in their core markets.

Both of these stocks trade all around the world on just about every market. And in the US you can buy them either directly in the OTC market or via ADRs. I tend to like buying the actual shares—because you get more of the dividends without Wall Street taking its cut and you get more control in terms of any voting and share exchanges and rights that might come along.

Don't get nervous about buying the real ordinary shares—often on the so-called pink sheets of the US OTC market. These are the big companies that just didn't want to bother with the NYSE. Watch the bids and offers and put in your orders accordingly to your broker.

RWE has been a long-term favorite of mine that I've recommended over and over again. And over the years, this electric power provider—as well as its water, petrol, and coal operations—keep pumping out the profits and, for shareholders, dividends.

Revenues keep growing by double-digits year after year. And with ample margins the dividends are always well-backed. In fact, the current dividend yield of 7.3% has been increasing over the past five years by over 29% per year.

That's not to say that the markets will always be positive on the stock during any series of weeks or months. But over the past year—including all of the messes out there—this stock has generated a return of more than 46%. And over the past five years, US investors following my lead have more than doubled their investment with a return of over 115%.

When it comes to phone companies, Deutsche Telekom isn't one that I've been much of a fan of. But it's a company that continues to perform—in some ways despite the efforts of management.

The key to this company, from an investor's standpoint, is that even with several ill-advised dalliances with new ideas, Deutsche Telekom is one of the truly essential companies in its core markets. So, it can afford to make mistakes and still keep generating piles of cash which in turn makes it possible to keep paying investors every year.

And with the stock price down a bit now is one of the times to buy into this steady payer that is throwing off a dividend of more than 8.1%. [The dividend on the ADR stood at 7.7% as of Tuesday—Editor.] And while it might not be expected to boost that dividend, it should continue to pay it.

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