Going Global Could Be Best Way To Secure Income From Your Investment
by Ritchie Mehta (14 December 2009)
According to analysts and dividend fund managers, global investment opportunities could prove to be highly attractive due to the possibilities available to companies abroad for their dividend stream to keep growing and growing over time, with some of the best opportunities available in the US.
While many people are confusing the economic situation in American with the financial health of many of their corporate companies, if you exclude the banks from the picture, there are actually a significant number of businesses with excellent business models, a sizeable number of health assets and profits streaming in from around the world. Yet due to the panic created by the recent financial crisis, there are opportunities available to invest in these companies now and see decent dividend yields and a likelihood that these dividends will increase in the future.
A prime example of this is Johnson & Johnson, makers of consumer and medical healthcare products, who have steadily increased the dividend paid for the last 44 years. In fact, Stuart Rhodes, manager of M&G's Global Dividend Fund, attributes the existence of their fund to Johnson & Johnson. After having been told by the CFO at the company that the first thing they do with the money coming into the firm each year is increase the dividend on company shares because they believe it makes them a more disciplined company due to not wasting money in other areas, they are clearly an attractive investment.
However, Rhodes offers some sound advice to potential global investors by encouraging looking at the yield last and emphasising the importance of thoroughly understanding the company, why it makes money and why it will continue to make money going forward. This will then allow the investor to see how far up the yield curve they can go with an investment, helping to avoid the traps of seemingly lucrative investments which end up falling well short.
With many opportunities available both in the US, and in countries such as Brazil, Australia etc, broadening your horizons and investing globally could be a good way to accumulate wealth for your retirement fund.