First, let's take a step back. Diversification has proven itself repeatedly to be the strategy of choice for the long-term investor. However, that word means different things to different investors and portfolio managers.
What's more important, one might ask -- the country of domicile, the markets where total revenues come from, or the sector?
I would argue that if you're balancing your portfolio by sector, then there are many companies where the country of domicile is moot -- as long as it's a stable Western nation -- and that some similar international corporations are either comparably dependent on the same global regions or vary wildly in the sources of their international revenue.
In other words, that word -- international -- can trip up even an experienced investor.
On to My Choices
Now to my picks. My picks all have revenue that is arguably more internationally diverse than their U.S. counterparts (domestic being defined for the purpose of this argument as the U.S., and international as outside the U.S.).
Five out of the five companies have better yields than their U.S. counterparts, and three of the five have better three-year returns; two of the three-year laggards have better one-year returns.
All numbers are based on each company's final results for their most recent fiscal year using 10-K form for U.S. companies and 20-F filed with the SEC for their foreign counterparts.
1. In the energy sector, France's Total (TOT) bests its U.S.-based counterpart -- Chevron (CVX) -- by every measure. (For more on this, see "Trade Ideas: Total Is Today's "Roof Leaker" Stock.")
On Monday at 1 p.m., Total was trading at $65.12, up 0.65% for the day. Chevron was trading at $126.87, down 0.8% for the day.
Total boasts a yield of 4.6% to Chevron's 3.2%, and Total's year-to-date (15.04%), one-year (15.04%) and three-year returns (45.11%) dominate over Chevron's returns of 8.82%, 8.17% and 36.45%, respectively. (The two companies are also joint-venture partners in several projects.)
According to SEC filings, as of the previous fiscal year, the companies had combined upstream/downstream total revenue in the following splits:
- Total: World $30.360 billion; US $1.611 billion; U.S. percentage: 5.31%
- Chevron: World $228.848 billion; U.S. $174.318; U.S. percentage: 76.2%