Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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Capture An Olympic-Sized
11.9%
Dividend Yield |
Published:
August 18, 2008
With the opening of the Olympics last week, the world's eyes have
focused on China. Savvy investors have been watching Asia's emerging
giant for years now, and many have profited handsomely. While there are
undoubtedly many worthwhile individual investments there, we think
income investors, on the whole, might do well to look elsewhere.
The Shanghai Composite Index offers an average dividend
yield of 1.5%. That's lower than London's FTSE, Germany's DAX, our S&P
and Brazil's Bovespa. Even Japan's Nikkei, which is typically considered
the lowest-yielding index in the world, is paying 1.6%.
Chinese stocks have also shown
extreme volatility and are currently down about -53%
year-to-date. With an average earnings multiple of 19, these
equities could easily have a lot farther to fall. Stability
and consistency afford the income investor a margin of
safety, and China offers little of either right now.
Broadening Our Horizons
This is one of the reasons we
particularly like Israel. Its market has been much more
resilient, its earnings multiples are lower and its dividend
yields are higher. Its currency has also been stronger than
the yuan relative to the dollar, which magnifies returns for
U.S. investors.
While Israel can't match
China's rapid +9% expansion, Israel's economic growth,
expected at an average +4.4% through 2012, is still
robust. Inflation is modest. And though political struggle
and ethnic strife may tend to dominate the headlines,
lawmakers there agree on an economic policy centered on
restrained government spending and foreign investment.
Israel exports $50.2 billion
worth of goods and services a year, enough to give the
country a $5 billion current-account surplus. Corporate tax
rates are substantially lower than the United States and are
scheduled to decline even further in 2010. The tax system
encourages unearned income (capital gains, interest and
dividends), and is generous toward foreign investors and
venture capital.
This favorable business climate
has been good for the market. The Tel Aviv 100 Index has
gained +127.8% in the past five years. That's a commanding
performance against the S&P 500, which reluctantly eked out
a gain of just +25.7% during the same period.
On an annualized basis, the Tel Aviv index outpaced the U.S.
benchmark by a factor of six. And, as a bonus for growth
investors, the index has an average dividend yield of 3.2%,
besting the S&P's 2.3% and more than twice what China has to
offer.
Ring the Bell, Take
the Money
One company we've found that is partly responsible for
setting that curve is a cellular and fixed-line phone
company that's paying an 11.9% dividend yield. We profiled
this outstanding company in this month's issue of our
premium income-investing newsletter
High Yield Investing.
The company ranks No. 1 in terms of subscribers, sales
revenue and cash flow. It controls 34% of the wireless
market and also provides fixed-line phone service to
businesses.
Israelis
love
cell phones -- many have more than one wireless phone, as is
evidenced by the technology's 120% penetration rate.
But the market still has room to grow. It's population
expands +2% a year -- higher than the world average 1.2% --
and its economic growth rate is even higher than that. An
expanding economy with more and more people translates into
more being spent on wireless services. And spend they do --
telecommunications accounts for more than 4% of Israel's
$185.9 billion economy.
The firm's most compelling revenue driver is technology,
which is enabling wireless customers to use their handsets
for more tasks, such as banking, e-mail, music downloads and
even videoconferencing. If the idea of a video linkup on a
cell phone is baffling, consider: Israel is a young country.
The median age is 29. These are people who grew up using
cell phones and are willing and able to exploit the
technology. The revenue generated from these services is
growing at an astounding +45% annual rate.
The company's dividend policy is to distribute at least 75%
of annual net income to shareholders in quarterly
installments. Besides the regular dividend, management also
seeks to distribute at least 50% of earnings each year.
During the past year, the company paid out $3.93 per share.
That gives the stock a yield of 11.9% of today's share price
($3.93/$33.15).
Dividends are based on Israel's local currency, the New
Israel Shekel. In the past year, the shekel has gained more
than +20% against the dollar, providing an equivalent boost
in the value of the dividends for U.S. investors.
Subscriber growth and value-added services led to a robust
+56% annual earnings growth over the past year. Earnings are
forecast to grow +20% this year and average +10% growth in
the next few years, largely because of the company's
data-service business. Voice services, which contribute the
lion's share of revenue, have been growing at a steady +2-3%
clip and are projected to continue doing so in the years
ahead.
These shares have enjoyed total returns of more than +40%
during the past year in a down market, but are still
attractively priced. They are selling at just 11 times next
year's projected earnings, which is a bargain considering
the double-digit dividend yield.
Income bolsters
returns in difficult markets
Israeli companies pay higher
yields because they want to attract capital to their
economy. This is an opportunity for your dollars to go where
they will be treated best -- with a double-digit yield and
the extremely likely potential for a substantial long-term
capital gain. These shares will earn you money while they're
earning you money. It's one of the things we look for in our
premium newsletter,
High-Yield Investing.
Subscribe today and we'll send
you the name of this security, and provide you with monthly
content and mid-month updates to ensure you're always fully
apprised of the best income investments the world has to
offer. To learn the name of this security,
click
here.
Good investing!
Carla Pasternak
Editor
High-Yield Investing
http://www.StreetAuthority.com
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please subscribe to Carla Pasternak's premium newsletter -- High-Yield
Investing. |
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