In the six years since the 2008 financial crisis, the world has changed dramatically, and with it the challenges of identifying the best investments for income. But with change comes opportunity, and in this inaugural issue of Global Income Edge, we’ll introduce an investment strategy that looks to the future of income investing.

We have made this change from Global Investment Strategist to help satisfy your hunger for income-producing investments, while keeping the global outlook that so many of you are interested in.

As it turns out, high income and a global perspective go hand in hand. 

The rise of global companies has come partly from necessity, as developed nations’ growth has slowed, and partly from opportunity, as developing nations’ growth has accelerated. As companies in developed nations expand into developing markets, the best of them are using new practices to grow not just bigger, but financially stronger and more efficient.

When I studied finance at Oxford, I analyzed case studies on how global companies adapted products to local and global tastes in new ways that produced higher earnings growth both in those emerging markets and at home.

For example, corporations used to make their products at home to sell to a global audience. Now, they have become adept at manufacturing products at lower prices in emerging markets and selling them at higher margins in developed economies.

And as tastes grow more similar from country to country, global companies are seeing more demand for one-world products that do not require customization for local markets. In the auto industry, for example, at one time a car model could vary significantly from country to country. But now, the world’s best-selling car, the durable Toyota Corolla, is pretty much the same in the 154 countries where it’s sold, to the benefit of Toyota’s bottom line.

In Global Income Edge, we identify companies that take advantage of such multinational strategies and that use them to afford to pay steady, high dividends.

The Future is Now

Global Income Edge is based on our analysis that shows a new class of income investments is emerging that is different than the utilities, health care and telecom investments that income investors have been depending on for decades.

These new, multi-national firms can deliver superior income to investors compared to one-country companies because of their size, strength and expertise in doing business across the world. The rise of these companies and their strong dividends is happening just in time, as central banks around the globe seem determined to keep rates low to help their ailing economies.

Many investors have resorted to chasing yield in high-risk investments in emerging markets, at the risk of losing everything. For example, some investors have been snapping up bonds from frontier markets such as Kenya, which sold $2 billion worth of bonds in June. What was the attraction? The 10-year portion of Kenya’s bond yielded more than 6%, compared with 2.6% on US Treasuries, 1.35% on German government bonds and a minuscule 0.6% on Japanese government bonds.

But Kenya is in an unstable region that is vulnerable to attacks from Somali extremists. Earlier this year, such attacks dealt a blow to Kenya’s tourism industry.

Further, investors have bid up some income investments to all-time highs. Stocks today have been more expensive relative to corporate earnings only three times over the past century, according to data from Robert Shiller, a Nobel laureate in economics. According to an April 2014 New York Times report, those other three periods were in the 1920s, the late 1990s and the prelude to the 2008 financial crisis.

Given the state of economies and markets today, we designed a model that uses screens to find income investments with key qualities. To start, they must have a track record of paying dividends and have cash cushions large enough to withstand the ups and downs of economies and markets.

Also, we were looking for companies that aren’t dependent on the prosperity of just one country. And we wanted companies with transparent -finances. That’s why the vast majority of our portfolio holdings are traded on American stock exchanges, as the US has the most demanding financial-reporting requirements. The investments are as easy to trade as Apple stock.

That may sound like a tall order, but more and more companies that meet these criteria are being created every day through mergers. Global competition continues to force unprecedented consolidation among industries, creating a new elite of global corporate titans. In fact, year-to-date global deal volume surged to $1.75 trillion, up 75% from the year-ago period, according to Thomson Reuters. That was the highest level since 2007, when deal volume reached $2.28 trillion.

Baking in Safety

Every investment has some risk, but we’ve diligently applied analytical tools and common-sense approaches to identify companies with the world’s best returns that have the best margins of safety.

First, we only looked at companies with a market capitalization (share price times shares outstanding) that exceeded $1 billion, because we wanted to eliminate smaller, less stable companies. Then we screened for the strength of their free cash flows that indicates their ability to pay dividends. We also applied proprietary models to measure their balance sheet strength.

And we believe that dividend-paying is not enough. As large as some of these firms are, they must also be on a growth track. A growing company is a stronger company, and it is more likely to keep paying and increasing a dividend. Of course, when earnings grow, so does the stock price, so you’ll not only get a nice dividend, but price appreciation as well.

For our Conservative Portfolio, we sought stocks with low price volatility, so that when market corrections happen, they will lose less.

We didn’t include companies in mature or dying industries, because they’re vulnerable to new technologies and new ways of doing business. We chose companies that are integral to new global growth trends, whether they’re in telecom (demand for digital services), financial services (rise of innovative banks) or energy (shale revolution).

Finally, to value our portfolio companies, we developed a new proprietary method, applying an intrinsic valuation that does not rely on frothy market values.

This approach has produced two top portfolios: Conservative and Aggressive. We also suggest four top World Funds. In this issue, colleagues Robert Frick and Benjamin Shepherd take a closer look at UK-based –Vodafone and US-based KKR & Co., our number-one picks, which are available in the Stock Spotlight section. And in this column in upcoming issues, I’ll keep you -informed on investment trends and -income opportunities the world over.

On behalf of the team at Global Income Edge, I’m pleased to welcome you to what we have designed to be the premier investment research service on global income investment opportunities.

What We Deliver

We deliver global companies to you in two portfolios. Our conservative portfolio has 10 investments with a current average yield of 6%. These companies include the Britain-based international telecom firm Vodafone, with a nearly 8% yield, US-based real estate investment firm HCP (5.2% yield) and Canada’s Dividend 15 Split, a mutual fund company that invests mainly in Canadian financial companies (10.1% yield).

Our more aggressive portfolio has eight investments with a current average yield of 9.9%. These companies are not as strong financially as those in our conservative portfolio—they may carry higher debt, for example. Also, their dividends may be less regular. They include the US private-equity firm KKR & Co. (7.9% yield) and Marine Harvest, a Norwegian company that sells its farm-raised salmon internationally (7.8% yield).

All the investments we recommend can be bought on US exchanges.