There's a considerable difference these days between US yields and international yields. Certainly more than I was aware of. Here's what I mean using mostly our holdings:
US Bonds (BND)- 3.45%
Int'l Bonds (EMB)- 5.18%
US REIT (VNQ)- 3.24%
Int'l REIT (RWX)- 8.49%
Int'l REIT (WPS)- 5.25%
US Oil CO. (XOM)- 2.1%
Int'l Oil CO. (TOT)- 4.27%
These investments must be different in important ways, but still, there's a pattern here. One obvious reason for the comparatively low US yields is that the US has been regarded as the world's safe haven. That could be changing according to the Wall Street Journal. Do non US investments historically have a higher yield than US investments? So far I haven't found the answer though I suspect so.
With regard to bonds, American Century, manager of our international bond mutual fund (BEGBX), wrote the following in May 2010:
Just be aware that bond portfolios utilizing international bonds, especially portfolios that don’t hedge the foreign currency exposure, tend to be more volatile than most other types of fixed income portfolios, and they derive less of their total return from income; they should be viewed as total return/diversification/dollar-hedging vehicles, not income vehicles.
Our investment in VNQ is considerably larger than that of the two international REITs. Given the VNQ yield of 3.24%, am I being adequately compensated for the risk? This article by Jim Fink at Investing Daily makes a strong case for Canadian REITs. Something to think about.
The two equities, Total SA (TOT) and Exxon Mobil (XOM), have similar earnings per share of $6.49 and $6.22 respectively; TOT is just nice enough to return more to its shareholders.
What I got out of writing this post is the need to pay more attention to dividend yields when evaluating investments. Over time seemingly small differences will add up.
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