Harvey Jones says the plunging pound boosts the charms of UK-listed shares that pay dividends in dollars, such as AstraZeneca plc (LON:AZN), BP plc (LON:BP) and Rio Tinto plc (LON:RIO).
It's official, sterling is now the world's ugliest currency. But investors might be sitting pretty if they invest in the handful of FTSE 100 stocks that pay their dividends in dollars and euros. Here are three more stocks offering dollar dividends.
AstraZeneca
Last time I looked at AstraZeneca (LSE: AZN), the only thing I liked was the dividend. Today, I like it even more, because that 5.8% yield is paid in dollars, boosting its value to UK investors. One pound currently buys you just $1.58, but some currency specialists suggest sterling could dip as low as $1.40, which would turbo-charge those dollar dividends. Sadly, there isn't much else to recommend about this pharmaceutical giant right now. AstraZeneca's recent results, published on 31 January, revealed a 15% drop in full-year revenue, due to loss of exclusivity on several brands, and its announcement that it wouldn't buy back any more of its shares this year. Earnings per share (EPS) fell 9%, after currency adjustments. The markets didn't like that, and AstraZeneca's share price shed 6% on the news. Adding to investor worries, AstraZeneca is poorly diversified compared to its rivals, lacking alternative forms of revenue outside its drugs pipeline, which looks a little blocked at the moment. Like many an embattled FTSE 100 company, it is looking to revive its fortunes by targeting emerging markets, and has posted strong growth in Russia, Saudi Arabia and China. Management predicts that "challenging market conditions will persist", so investors will have to be it for the long haul. Still, there's always those dollar dividends to keep you company.
BP
It has been a long, slow road to recovery for BP (LSE: BP) (NYSE: BP.US) following the Gulf of Mexico oil spill, but did you ever really doubt it would get there? At £4.70, its share price is up 6% this year, and more than 30% since the depths of the Deepwater crisis in June 2010. Better still, its once-mighty dividend is being rebuilt and now yields 4%. And remember, that's a dollar yield. It is covered 4.7 times, which gives BP plenty of scope for future hikes. The after-shocks from the oil spill rumble on, with BP recently paying a record £2.5bn settlement for federal criminal charges, plus there's a multi-billion pound claim for civil charges still in the pipeline. It has been a tumultuous time elsewhere, with BP offloading its stake in its TNK-BP joint venture with Russian oligarchs and forging a new exploration alliance with Kremlin-backed Rosneft, which sounds like a step up in political terms. BP has just started operations at its PSVM offshore project in Angola, which could eventually produce 150,000 barrels of oil a day. The oil and gas giant announces its latest results on Tuesday 5 February, but analysts predict a 4% drop in 2012 profits, compared with 2011. Any subsequent knock to the share price could make a good entry point for long-term investors, especially with BP trading on a modest price-to-earnings ratio of 8.5 times earnings, and dishing out its dividends in delicious dollars.
Rio Tinto
If you're buying its national mining giant Rio Tinto (LSE: RIO) (NYSE: RIO.US), you are effectively buying into the China growth story. So first, work out what you think about that, given the mixed economic data coming out of China. Rio Tinto's core business is extracting iron ore, worth around two-thirds of its revenues, and if Chinese demand drives up prices, you could hit pay dirt. You aren't just buying China, you are also buying a dollar dividend. Rio Tinto currently yields 2.9%, below the FTSE 100 average of around 3.5%. What investors are mostly looking for is growth, and that's what they have been getting. In mid-January, Rio Tinto posted "another year of strong operational performance across the group", with an annual record 253 million tonnes of global iron ore production, up 4% on 2011. The group's 30% stake in mined copper production at the vast Chilean Escondida mine rose 38% during the year. Its dedication towards saving costs, boosting productivity and increasing its dividend should all tempt investors. The downside? Costs are rising across the mining industry. Commodity prices remain volatile. Group net debt went from $8.5bn to $13.2bn in the first six months of 2012, as Rio Tinto spent heavily on acquisitions, capital expenditure, its rising dividend and share buyback programme. I still think it's a buy, but with that dollar dividend the icing, rather than the cake.
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> Harvey owns shares in BP, but no shares in any other company mentioned in this article.
