This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Finding Overseas Value at Home

Reduced tax rates on dividends and the weak U.S. dollar present weary U.S. investors with opportunities abroad.

And thanks to the time-honored, but not widely known, investment devices called American depositary receipts, or ADRs, U.S. investors don't have to become instant experts on a multitude of languages and currencies. ADRs allow Americans to invest in large- and medium-sized foreign companies using U.S. dollars and domestic stock exchanges.

One big attraction of ADRs is their dividends. A Morgan Stanley study showed that while the typical U.S. dividend is 1.7%, the dividend rate is 3.6% in developed Asia -- excluding Japan -- 3.3% in the U.K., 2.9% in Europe and 2.4% in emerging free markets.

The 2003 tax act dropped rates on dividends from 20% to 15% for the highest income tax brackets and from 10% to 5% for those in the lowest brackets. However, there's no guarantee that the next president -- even President Bush himself -- can retain low taxes on dividends after the current tax breaks expire in 2009.

Even though ADRs are denominated in dollars, they offer investors a currency play that can be volatile. When the dollar is weak, as it is now, it amplifies robust returns on the foreign companies that ADRs invest in.

On the flip side, when the dollar rallies against currencies from other countries, ADRs from those countries will fall at a more precipitous rate than shares held by direct investors in the parent companies.

For now, however, ADRs offer nothing if not a welcome diversion. While U.S. stock markets continue to struggle, as investors wonder what the Federal Reserve will do next and await the outcome of a divisive presidential election, elsewhere in the world in Latin America, Asia and Russia, economies are stirring.

Some individual ADRs help tell the story: For the year to date through Sept. 27, the ADR for Brazilian food company Perdigao S.A. (PDA) is up 81%. Ditto for the Japanese lender Nissin (NIS), and Moscow-based Mobile Telesystems OJSC (MBT) has climbed 66%.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs