Around The World In Four Dividend Stocks

Alternative Foreign Oil And Gas Dividend Stocks

 

Oil stocks have been on the mind of many bloggers in recent months as many present decent value and low PEs in the high priced stock market of the day. Many domestic favorites include XOM, CVX, COP, PSX and OXY to name a few. On the foreign front, the oil companies that are getting the most attention seem to be BP, TOT and RDS.

 

There are many other foreign oil stocks that pay generous dividends as well and might deserve a spot in your portfolio. Just watch out for potential dividend cuts or eliminations. With that in mind, let’s begin our travel around the world looking at several dividend paying oil and gas stocks.

 

Our first stop is Italy and Eni SpA (E). Headquartered in Rome, Italy, E is involved in oil and natural gas exploration with operations around the world including Libya, Egypt, Norway, the United Kingdom, Angola, Congo, Nigeria, the United States, Kazakhstan, Russia, Algeria, Australia, Venezuela, Iraq, and Mozambique. E currently yields a very generous 4.40% with a moderately high payout ratio of 60.2%. For now it seems that this dividend is safe with current cash flow but one must always be cautious, especially with many of the foreign oil stocks, and be on the lookout for potential dividend cuts such as what happened with PBR. E has a relatively low PE of 14.2 which is low compared to the S&P but slightly higher than its five year average and its peers suggesting the share price may have run a little ahead of fair value. E’s annualized dividend growth rate for the last ten years stands at a moderate 6.12%. Not exactly a gang-buster dividend grower.

 

Next stop on our world tour is Stavanger, Norway and Statoil ASA (STO). STO currently yields a relatively high 3.60% with a moderate payout ratio of 44.5%. Like E, STO is engaged in the exploration, production, transportation and refining of crude oil and natural gas mainly in the North Sea, the Norwegian Sea, and the Barents Sea. STO has a very low PE of only 10.05 which puts it well below the market in general and its peers. STO’s annualized dividend growth rate for the last ten years stands at a healthy 11.24%.

 

Next we are off to South America to visit Bogotá, Colombia and Ecopetrol SA (EC). EC is another integrated oil company, that engages in the exploration and production of crude oil and natural gas primarily in Colombia, Peru, Brazil and the United States Gulf Coast. EC currently yields a very high 6.20% with a moderately high payout ratio of 65.1%. The current PE of EC is only 10.5 which is well below its peers, the S&P and even its five year average PE. In fact the forward PE for EC is only 7.7 and it has a PEG of 0.9 suggesting this may be high yielding undervalued dividend stock at current levels. While EC has a shorter dividend history than the other stocks mentioned the five year annualized dividend growth rate stands at an eye popping 44.72%. EC is definitely one to look into more deeply.

 

Finally, our trip around the world takes us to Beijing, China and PetroChina Co. Ltd. (PTR). PTR produces and sells oil and gas in the People’s Republic of China. It also operates a network of service stations and oil and gas pipelines throughout the country. Currently yielding a healthy 3.60% with a relatively low payout ratio of 38.2%, PTR is another low PE foreign oil dividend stock at 11.3. The ten year annualized dividend growth rate for PTR is at a healthy 8.78%.

 

Clearly, there are many choices when looking for dividends overseas in the oil and gas sector. The above present some interesting choices for dividend investors as all have low PE’s relative to the market and may be considered undervalued at current levels. Also, the yields offered by these oil and gas companies can rival many of the MLPs or REITs many dividend investors are fond of.

 

Too often, as dividend investors,  we get caught up in discussing many of the same dividend stocks over and over and neglect other dividend opportunities that may exist in particular sectors.

 

Do these foreign oil and gas stocks have a place in your portfolio? What energy stocks are currently in your portfolio?

 

Disclosure: Long NONE

16 thoughts on “Around The World In Four Dividend Stocks

  1. Nice list! I usually don’t invest in foreign companies because I have a difficult time finding all the information. And I don’t really have any special insight into foreign markets. How do you go about gathering all the data? Isn’t converting foreign currencies to USD somewhat difficult too? Thanks.

    Cheers,
    Henry
    Henry @ Living At Home recently posted…Turning A Hobby Into A Business My Profile

    • Hi LAH,

      You, like many others out there, have the same sentiment regarding foreign stocks. Most of the information is readily available on foreign stocks as they trade just like U.S. stocks on American exchanges as ADRs (American Depository Receipts). So all the information is in U.S. dollars and gleaning information is no different than any American stock. I just wanted to show that there are foreign investment options out there that have low PEs and pretty high yields that some dividend investors might find interesting. Thanks for commenting.

  2. CVX, BP, SDRL, KMI, and NOV are in our portfolio. Yep, I bought back most of the BP I recently sold when the price dropped and I realized that I had made a stupid mistake selling it in the first place. Sometimes you get lucky.

    I think you have to be braver than I am to invest in foreign energy stocks. I keep thinking about what happens when foreign governments decide to nationalize their natural resources and how quickly that can make an investment worthless. I doubt that would happen in Europe so I am comfortable with BP. Might just be an irrational worry.

    Thanks for another article about stocks nobody else is discussing!
    KeithX

    • Hi KeithX,

      Wow you have a lot of energy stocks in your portfolio. I understand some of the worry in investing overseas but as I mentioned to DD, sometimes you see a low PE, high yield stock offering over 6% and think, maybe I’ll nibble a bit. What percentage of your portfolio is energy?

    • Hi DD,

      While it’s true that there are many domestic choices in the energy sector, I did want to point out some other low PE, high yield foreign dividend payers. I happen to agree that sometimes it’s tough to justify moving overseas for investment but when you see a yield of over 6% it makes you think. Thanks for your comment.

  3. Hi DivHut,
    Interesting post.
    I am lacking some titles in the energy sector. I might get some inspiration from you…
    Thanks and best regards from Germany
    rickrack

    • Hi rickrack,

      Glad you found the post interesting. I just wanted to highlight the other, less talked about, foreign oil and gas stocks that all have low PEs and relatively high yields as well. I think some of the companies mentioned belong in yield hungry portfolios. Thanks for commenting.

  4. Great article as usual! Thanks for sharing!
    I did very quick glance at stocks you mentioned. So far as a girl who likes sales I prefer EC at this moment because this stock is trading in my favorite area for buying – close to 52 low. Analyst predictions give some room to grow. Their dividends are the highest from this group, although they just started paying it in 2008. I need to take another look on the rest of data.
    Also do you know if we need to pay any additional taxes on dividends from foreign stocks?
    At this moment I have only KMI in my portfolio.
    Happy Healthy and Wealthy Girl 🙂 recently posted…My weekly Stock watch list (7/11) and my stock activitiesMy Profile

    • Hi HHaWG,

      Appreciate the compliment! I agree the very high yield of EC makes it look very compelling along with the low PE that all the stocks seem to share. Sometimes a high yield can be the result of a recent stock sell off as share price drops the yields go up. In any case, these foreign oil and gas stocks deserve, at the very least, a look.

      Regarding taxes, I’m definitely not a tax professional but from what I know every country has different tax rules with regard to stocks. For example, I know BP dividends are taxed like regular dividends, while dividends from French oil giant TOT have, I believe, a 30% withholding tax. As always, consult a tax professional with each foreign stock you are considering. But I do know that if any foreign tax is paid at tax prep time you get a foreign tax credit for what was paid.

    • Hi J,

      These foreign oil and gas stocks looked interesting to me because they all have very low PEs and all pay fairly high to very high current yield. Just something to consider being a dividend investor. Thanks for stopping by.

  5. Nice list, I just added RDS.B in my portfolio as well I have OXY as my top domestic play in the USA. One company not much talked about but is dirt cheap with risk from Geo politics is Gazprom OGZPY I am long with a over 5% yield but only paid annually. I can understand people not wanting to invest in Russia but now might be the best time to buy a little when things are so bad. Thanks DSF

    • Hello DSF,

      Glad you like the list I compiled. I wanted to feature some of the lesser discussed foreign oil and gas stocks with this article. Of course, Gazprom, with Russia being in the news a lot recently, may present some decent value for investing. In general, I’m not fond of dividend payments made annually as it does not compound as fast as quarterly or monthly dividend distributions. Nice pick up with RDS.B though. It’s been in the back of my head for some time and seems to be a popular pick among the dividend bloggers. Quite honestly, I got very turned on to Canadian banks after a more recent post I wrote. Do you own any in your portfolio? Thanks for commenting.

        • Hi DSF,

          Currently, I’m not invested in any Canadian bank either but after my preliminary research I have found several that seem very compelling to invest in for the long haul. As you mentioned, many of the large Canadian banks have fared a lot better than their American counterparts during 2008/9 and have stuck with their long history of continuing dividend payments. Thanks for commenting. These reasons alone make me want to have some exposure to that sector.

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