Fat Yields From Foreign Dividend Funds

Hungry for reliable income, investors have been embracing dividend-paying blue-chips. Plenty of solid utilities and consumer companies yield 3%. That seems like a rich payout at a time when 10-year Treasuries yield 2.0%. But to get an even higher yield, consider funds that focus on foreign dividend stocks. Many foreign blue-chips yield more than 4%. Forward International Dividend(FFINX), a mutual fund, yields 5.9%.

Besides paying higher yields, foreign dividend payers tend to be cheaper than their U.S. counterparts. While the S&P 500 has a forward price-to-earnings ratio of 13, the stocks in the Forward fund have a P/E of 8.6. Foreign stocks have traditionally paid higher yields than their U.S. counterparts. Investors in many countries have preferred fat dividends, and companies have paid out relatively large amounts of their earnings.

Source: The Street

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