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Life's journey is a marathon, not a sprint. That's the moral
of the story of the tortoise and the hare. It's a good thing
for investors to keep in mind, too.
No
one gets rich quickly -- even lottery winners are typically
paid over time. Slow and steady wins the race. That's not
just a soothing adage for market laggards to console
themselves with when justifying lackluster portfolios. It's
a quantifiable fact of long-term investing.
Consider China. Investors have been hearing about the
country for
the past few years: Its industry is booming and a middle
class is emerging, both of which are powering remarkable
economic growth.
It's a fascinating story: We're not disparaging China,
criticizing its returns or discounting its very bright
future.
But these are the facts: The Shanghai Index stood at 144.22
on Dec. 31, 1997. Eight years later, the index read 143.87. The capital investors sank into China was dead money for
that time. Things weren't dead everywhere, though,
so China's
eight-year doldrums
cost its investors a lot of opportunity. Even the S&P 500
managed a total return of +45.3% during that time.
Now, the rest of the story:
A few years ago, investors began to pour billions into China. The
index sprang from 143.87 in 2005 to 342.79 in 2006 -- and
then skyrocketed to 720.36 in 2007. Its annualized rate of
return for the past ten years was +17.4%.
Impressive, right?
Sure. But the S&P International Dividend Opportunities Index
-- the red line on our chart below -- did even better. It
delivered annualized gains of +18.8% -- enough to turn an
initial $20,000 investment into an impressive $111,698.
And
notice what happened in late 2002: China's return flattened
out while the dividend index began a steady climb. When
China started to rise, it took off like
the proverbial hare. But it couldn't catch
-- let alone surpass
-- the tortoise.
Let's look at another hot market and compare its results
with the dividend index.
Brazil is one of the most vibrant economies in the world. Its markets offer the promise of standout returns.
High-Yield International Editor Nick Lanyi has not only done
extensive research on the country, he's also added
several Brazilian
picks to the income portfolios he manages for
subscribers.
You can see the uptrend in the country's benchmark Bovespa
Index. Actually, it's more of an explosion. Its annualized
gain for the ten years ended Dec. 31, 2007 was a robust
+14.7%. But Brazil's story mirrors China: Money invested in
the South American nation languished until the end of 2004. In fact, many investors in the country took losses as the
market fell as much as -75% before coming back to the
break-even point.
Now, Brazil's performance for the last few years also mirrors China, as Brazil's index shot from below
10,000 to nearly
40,000 in only three years.
That's a return any investor should be proud of -- but
it's nevertheless the bottom line of the chart below. As you
can see, the Dividend Index reached the Bovespa's high fully
two years earlier -- and it continued to rise
steadily after that ...
Given this index's performance, you're probably
wondering exactly what the S&P International Dividend Opportunities
Index tracks. And you're definitely wondering how you can
invest in it.
The index tracks 100 non-U.S. companies. To be
included, companies must be listed on an exchange, be
profitable, have positive five-year cumulative growth and a
market cap of more than $1.5 billion. Of all companies
that meet these criteria, the 100 highest-yielding companies
are chosen for the index.
Now for how to invest in it.
Would you believe you might only be a couple of mouse
clicks away from owning all of these 100
outperforming, high-yielding stocks? The SPDR S&P International Dividend
exchange-traded fund, which trades under the ticker symbol
DWX, allows investors to buy all the shares in the index and
mirror its performance. The fund pays
dividends quarterly and has an expense ratio of 0.45% -- far
less than you'd otherwise pay to buy these international
shares, none of which are U.S. companies. So far this year,
this fund has paid $3.25 in dividends. If that payout
continues, the fund will yield 12.9% this year.
You may well be wondering what
would happen if you added the best U.S. dividend achievers
into the mix. Data from S&P's Global Dividend Opportunities
Index, which includes U.S. companies, shows that this would
indeed increase the yield to more than 10.2%.
And how do you invest in that?
Alas, you can't. At least not for another 13
days.
On Sept. 30, the
Claymore/BBD High Income Index ETF (AMEX: LVL) is
changing its name and revamping its strategy. The new name
will be "Claymore/S&P Global Dividend Opportunities Index"
and the fund will adjust its holdings to track this index.
This fund will seek to mirror the
Global Dividend Opportunities Index, which has a 10-year
average return of 12.5%.
We can't predict the fund's dividend payout, but the index's
current yield is 10.2%.
That's undoubtedly a strong yield
-- superior to its
sister index -- but you can do better still. If these
two indices have piqued your interest in international
investing, we'd like to show you a pick that has beaten them
both. It has exceeded the indices' year-to-date performance,
and its 2008 performance has already surpassed the indices'
ten-year average.
It's a pick High-Yield International
Editor Nick Lanyi made in January -- and it has since
generated a total return of +22.6%. (And, not surprisingly,
it's also the highest-weighted stock in the Global Dividend
Opportunities Index.)
If
the International Dividend Index provided +18.8% gains with
meager single-digit yields, then imagine if you invested in
the best individual stocks that make up this index
-- cherry-picking only those with the highest yields.
That's what we do in
our premium
High-Yield International
newsletter. We recently recommended a Brazilian stock
with a 13.0% yield, and a Canadian natural gas trust with a
14.1%
yield. And if the past is any guide, then these
high-yielding companies in foreign lands should blow away
the index that blew away China and Brazil!
To learn the names and ticker symbols
of these two picks, as well as dozens of other foreign stocks
with double-digit yields, visit
this link to read our latest in-depth research report.
Global Dividend Opportunities
GlobalDividends.com
839-K Quince Orchard Blvd.
Gaithersburg, MD 20878-1614
P.S.
-- Don't miss a single issue! Add our address, Editors@GlobalDividends.com,
to your Address Book or Safe List. For instructions, go
here.
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