Things To Consider Before Investing In Foreign Dividend Stocks

Are you a dividend growth investor? A retiree looking for income? Just an average investor looking for a place to park some cash? Most of us, at some point or another, have considered investing in a stock solely for the dividend it provides. Most of us also know that it is prudent to diversify our holdings in order to mitigate risk. Why? Because all it takes is a growth tech stock to miss earnings by a cent or an errant comment misinterpreted the wrong way to cause the markets to sell off, and then all the index-tracking ETFs will indiscriminately sell your blue chips, along with everything else regardless of fundamentals. But I digress. Allocating a portion of your portfolio to foreign stocks is one way to diversify and mitigate risk. However, holding foreign stocks comes with its own set of problems, including fees, exchange rates, taxes, and paperwork. In this article, I will give a brief overview of the issues you should consider before initiating a position in a foreign stock, particularly one that pays a dividend.
Foreign Stocks Take a Bit More Effort Investors living in the United States are fortunate - being one of the largest markets in the world and a financial powerhouse, many foreign companies aspire to be listed on American exchanges in order to access the vast amounts of capital flowing through our economy. However, there are many solid businesses all around the world; investing abroad just requires a bit more work.
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