Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.


A Massive String of Double and Triple-Digit Winners

A Massive String of Double and Triple-Digit WinnersThe cash keeps pouring in for Profit Catalyst Alert readers. In the past few weeks, they’ve seen gains of 31%… 135%… and even 250%. More incredibly, those profits came on the heels of another string of winners sporting gains of 56%… 100% (twice!)… and 110%. We’re letting a limited number of additional people get access to these trades. Go here for the details.



Dividend Investing in the Land Down Under

By Roger Conrad on September 16, 2011

Investors’ need for yield, robust energy spending and the growing wealth of emerging economies: Those three trends transcend the current turmoil in the stock market. Betting on them is likely to be critical to investing success for years to come.

High-quality Australian stocks tap into all three. First, there’s a tradition of paying out a high percentage of earnings as dividends to stockholders. The country’s biggest telecommunications company, for example, boasts a yield of nearly 10 percent.

Second, Australia along with Canada, South Africa, the US and Russia is one of the world’s true resource storehouses. The country produces a fair chunk of the world’s key industrial metals, including bauxite (aluminum ore), copper, iron ore, lead, nickel and zinc, as well as platinum group metals (PGMs). It also produces gold and sizeable quantities of precious stones, such as diamonds. And it’s a major player in global agriculture as well.

Australia also has huge reserves of energy, including thermal coal, metallurgical coal (used in making steel), oil, natural gas and rich hydroelectric potential. In 2009, Australia exported a little less than 10 percent of the world’s liquefied natural gas (LNG), a total value of $7.71 billion. That market share is on track to reach 30 percent in the next couple years, as major projects such as Gorgon start to ramp up.

Some $214 billion in projects are already under way and tens of billions more are likely to be spent over the next decade–with an estimated “stranded reserves” of 140 trillion cubic feet in Australian waters a primary target.

Third, Australia is on the doorstep of Asia, which is rapidly becoming the world’s biggest import market for a wide range of natural resources. Geographic proximity means less expense to transport to markets. And Australian expertise is in heavy demand as well. Iron ore and metallurgical coal–both key elements in making steel–have been in particularly high demand in China and increasingly from India.

Chinese demand for LNG, meanwhile, is on track to skyrocket, as the country’s gas usage rises from the level of Germany’s (2010) to that of the entire European Union by 2035. The Gorgon field already has contracts from China and India totaling $64 billion, even with actual production not scheduled until 2014.

Resource wealth and Asian demand for it kept Australia high and dry during the 2008 debacle. The country’s stock market gave up some ground. But its economy was the only major that did not slip into a recession.

It would be even better prepared for a still unlikely reprise of 2008. Today’s debt burden is less than 7 percent of gross domestic product (GDP). That compares to more than 70 percent for the US and nearly 130 percent for Japan. And its banks are strong, with limited exposure to European sovereign debt woes and the pole position for investing in high-growth, high-savings Asia.

Over the past 110 years, Australia’s stock market outperformed the world. The big numbers above don’t guarantee a repeat performance. Neither does being tapped into the three transcendent trends of investor demand for income, rising spending on energy and Asia’s emergence. But they do make the land “down under” one of the best bets for big investment returns in late 2011.

Better, stocks of solid Australian companies are cheaper than they’ve been in quite a while. Ironically, that’s in large part due to fears that we’ll see a new global recession that will slow Asian demand for the country’s resources, despite the fact that this did not occur in 2008-09.

Australian stocks hold one other key advantage for investors: a strong currency. The Aussie dollar has a close correlation to prices of oil and other natural resources. It’s also allowed to fluctuate against the US dollar more than the Canadian dollar is, as Australia depends far less on US trade.

That should add up to considerable upside against the greenback in coming years, as prices of energy and other commodities rise. US investors will benefit from both share price appreciation and higher dividends, as the US dollar value of what’s paid in Aussie dollars rises.

As for risks investing in Australia, the chief one is that Asian growth comes unglued. In fact, overblown worries about a slowdown in what are currently the world’s most vibrant economies are likely to keep Australian stocks volatile in coming months, or at least until fears of a global recession subside.

With such a slowdown already priced in, however, the risks of further downside if one does occur are slight. And if the world does muddle through, things are likely to turn higher in a hurry.

The country has a longstanding reputation of encouraging foreign investment, particularly in the all-important natural resource sector. Occasionally, however, governments come to power that want a larger piece of the profits.

The Labor Party government’s loss of its majority in parliament last year halted momentum for a massive “resources super profits tax” on major resource producers. But as is the case in many English-speaking countries, there’s a strong strain of populism that’s always a threat to tread on the rights of shareholders, with foreigners prime targets.

Temptation to impose a new super tax just might become too much to resist, should resource prices remain robust and the rest of the Australian economy weaken. That, in turn, could slow the country’s economy, even if Asia demand for output remains robust.

The good news is that it was voter anger that has largely tabled the resource tax, as Australians worried about the effect on investment and jobs. The tax still has its advocates, but that’s a very pro-business sentiment–and should be quite encouraging to investors.

Lastly, there’s the fact that for most of the broker universe, Australia is largely an undiscovered country. Information on New York Stock Exchange-listed companies such as BHP Billiton (ASX: BHP, NYSE: BHP) is relatively easy to come by. But stocks that trade only over-the-counter (OTC) in the US will take more effort. As for commissions and fees, more than a few investors will be in for a shock if they try to use their regular brokers to buy Australian stocks.

Fortunately, employing a little research to find the right brokers will easily surmount all of these problems. Wise selection can avoid most regulatory and political risk. And even the 15 percent dividend withholding tax–a standard for investing in most countries–can be recovered by filing a Form 1116 with your US taxes.

In short, if investors are willing to think a little outside the mainstream, they can reap all the benefits of holding solid, high-yielding Australian stocks and avoid the pitfalls. And to that end, my frequent collaborator David Dittman and I are launching a new, complimentary weekly service, Down Under Digest.

Down Under Digest is free to all Utility & Income readers. Click here to sign up to receive weekly issues.

You Cruise, You Win

Join Roger Conrad and several other investment advisors for six nights of luxury, fun and investment talk on the Money Answers Investment Cruise from Mar. 4 – 11, 2012.

Explore the blue waters of Aruba, Curacao and the Bahamas while getting Roger’s latest strategies for making money in challenging markets.

For more information, please click here. To reserve your spot, click here, and be sure to select Roger Conrad in the first field of the online order form.

You might also enjoy…


12 Stocks Virtually Guaranteed to Go Up in 2018

You may not believe it, but I have a calendar in my hands right now that tells me the exact date and time when a few stock are practically guaranteed to go up. 

Twelve of them, in fact.

And if you were to invest in them following the simple buy and sell instructions found in this calendar…

You could be making $1,181… $11,814…. and as much as $190,916 more than by using a “buy-and-hold” strategy.

And here’s the best part…

I’m giving away a few copies of this calendar to interested investors (First come, first served).

With this calendar, you could get higher profits with less risk.

Click here to get the full story, and to claim your copy.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.