08/14/09 Baltimore, Maryland
Income investors that want to diversify out of the dollar, you should buy American Depositary Receipts. ADRs, if you are unfamiliar, are certificates issued by U.S. banks that represent shares of a foreign company. While ADRs are denominated and traded in dollars, and also pay dividends in dollars, they don’t have the usual fees and hassles associated with buying shares on foreign exchanges.
This is the theme we have been hitting the hardest in recent months. ADRs have been a cornerstone of Lifetime Income Report. From the very first issue, we had at least two ADRs in our portfolio. This month, we are adding another.
There’s a huge reason why we buy ADRs, instead of the currencies themselves. Instead of just the upside of foreign currency to U.S. dollars, we also get the benefit of fast-growing emerging markets and mega income from international players.
Foreign markets, especially now, have huge dividend yields. The U.S. is near the bottom of the list of places for income investors to look. The smart money is in companies staying out of the dollar.
Jim Nelson
Jim Nelson began his investing career during the tech boom at age 14 – with purchases of Starbucks and AOL. Early inspiration came from an old Tweedy Brown whitepaper: “What Works in the Market.” He graduated with a degree in Political Science from Pittsburgh University, Nelson focuses on income investing, including dividends, covered calls, and fixed-income. Additionally, he covers MLPs, ADRs, utilities, consumer staples and tobacco. Nelson is the managing editor of Lifetime Income Report.
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