The following originally appeared March 19 as an alert for Dividend Stock Advisor:
It's been my experience over the past two decades that investors tend the see the U.S. dollar through rose-colored glasses. When it's weak, that's a major boon for multi-national firms. But when the dollar is strong, it's generally ignored in the belief any exposure can be hedged or offset with another positive line item.
We learned from the latest earnings season that very few companies were able to escape the currency bug in the fourth quarter and in 2015 guidance. Even though earnings season has ended, we continue to see estimate cuts for blue-chip stocks on a daily basis. This is especially important to note for any current or future dividend stock, because foremost in our mind is how secure the dividend is and can it continue to grow.
The most sustainable way to maintain or grow your dividend is with earnings and cash flow. With that in mind, here is a breakdown of where companies in the Dividend Stock Advisor's model portfolio generate their sales (for those that disclose it). We've already factored in currency effects into our near-term expectations, but here's a look to how we figured that and who may benefit or suffer from the next big currency move.
- AT&T (T): 100% U.S.
- Altria (MO): 100% U.S.
- Campbell Soup (CPB): 78% U.S.
- ConocoPhillips (COP): 55.5% U.S., 20% Europe.
- General Electric (GE): 47%, U.S., 17% Europe, 16% Asia.
- Helmerich & Payne (HP): 90% U.S.
- KLA-Tencor (KLAC): 65.5% Asia/Pacific, 24% U.S.
- Lockheed Martin (LMT): 80% U.S.
- Pfizer (PFE): 38.5% U.S., 23.5% developed Europe.
- Sonoco Products (SON): 63.8% U.S., 25.2% Europe/Russia.
- Southern (SO): 100% U.S.
- Tompkins Financial (TMP): 100% U.S.
David Peltier manages TheStreet's Dividend Stock Advisor, a model portfolio of dividend-paying stocks. Sign up here for best-of-breed dividend stocks that will pay a reliable and provide a significant income stream.
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