Foreign dividend stocks that can afford to boost dividends

We asked Ian Riach, manager of the Bissett Multinational Growth Fund, to discuss some of his top dividend picks, focusing on those that are likely to increase their payouts. When choosing stocks, Mr. Riach starts by screening for dividend-paying companies that generate at least 20 per cent of their revenue from outside their home country. He then ranks the companies based on dividend yield (the higher the better), payout ratio (the lower the better) and the number of dividend increases over the past five and 10 years (the higher the better).

“If a company has consistently increased its dividend over a number of years, has a decent yield and a low payout ratio, that, to me, indicates – and we’ve done some back-testing on this – that the dividend is sustainable, that they should keep paying it and they should keep growing it,” he says. If a stock passes the initial tests, Mr. Riach then digs into the company’s fundamentals before adding it to his fund.

Source: Globe and Mail

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