It’s easy to be swept away by fear.
The European debt crisis is escalating. China is slowing. And people are still worried about a U.S. recession.
But if you’re at all familiar with my work, you know I don’t buy into “crisis and collapse” stories. In fact, over the last several years, I’ve shown you how to buy into times of fear and panic… to make big, safe returns.
[ad#Google Adsense 336×280-IA]When municipal bonds collapsed in 2011, for example, I told you, “If you can ignore one of the media’s biggest sources of hype, you’ll see there’s an amazing opportunity for income investors right now.”
Since then, you’ve had the chance to make as much as 95% owning municipal bonds.
There’s a similar situation setting up right now.
You’re not going to like it. But that’s why I think it’s going to be a big opportunity…
Two years ago, when investors were panicking about the future of America, I told my readers about a unique way to protect their wealth from what they saw coming…
I told them to own the world’s best dividend-paying companies that earn a big chunk of their profits in foreign currencies.
Here’s what I wrote:
It doesn’t matter what currency the company is making profits in – Russian rubles, Swiss francs, Chinese yuan, Indian rupees, euros, and all kinds of other currencies work just fine. U.S. multinational companies earn their profits in foreign currencies, and then convert them into annual dividends.
For folks worried about diversifying their assets out of U.S. dollars, this is one of the greatest ideas in the world…
Take Coca-Cola (KO) for example. The giant beverage company gets about three-quarters of its revenue outside of North America. It’s huge in China and India. At the time, it yielded almost 3%. And it had a huge cash hoard.
The risk here was minimal. And since my essay, investors have made 30%, including dividends.
We can make a similar bet right now in Europe. Despite all the fear and hype surrounding Europe, the continent’s best companies are still making money.
I’m talking about companies like AstraZeneca (AZN), Britain’s second-largest drug company. You’ve probably heard of Symbicort (asthma medication) and Crestor (lowers cholesterol), two of AZN’s most popular drug brands. AZN is the type of shareholder-friendly company I like. It’s been paying a dividend since 1985 and currently yields 8.6%.
Right now, AZN trades at a price-to-earnings ratio of just 7.1… That’s cheap compared to the S&P 500’s 14. And if you’re worried about the crisis in Europe, 68% of AZN’s sales are outside of Europe.
Or maybe you’ve heard of Total (TOT), France’s biggest oil producer. It’s the fifth-largest oil company in the world, operating in more than 130 countries. And this year, Total announced it has three major projects in the works… in Australia, the Norwegian North Sea, and Nigeria… helping cement its global presence. Like AZN, Total’s trading at a low price-to-earnings ratio of 7.1. And with a current dividend yield of 5.5%, it generates steady income for shareholders. (These factors combined mean the company can do well even if oil prices decline.)
Owning companies like these gets you exposure to rapidly growing emerging markets… and still gives you plenty of “sleep at night” peace of mind that your investment is in a stable company with a long track record of performance… operating under a developed legal system that protects property rights… and subject to reasonable regulations.
And with all the fear surrounding Europe, these companies are much cheaper than they should be. Like AstraZeneca and Total, European stocks in general are trading for less than 10 times earnings and pay 4%-plus dividends.
The fear and volatility we’re seeing today is creating periodic “fire sales,” allowing you to buy valuable assets for pennies on the dollar. Taking advantage of the panic will set you up to make big, safe gains down the road… just like we did with municipal bonds and American stocks.
If you can ignore the “doom and gloom” hype, you can buy some of the world’s best businesses at incredible prices.
Here’s to our health, wealth, and a great retirement,
Dr. David Eifrig