Consider the Currency Effect

Which dividend stocks gain or suffer from the next currency move?  
Stocks quotes in this article: T, MO, CPB, COP, GE, HP, KLAC, LMT, PFE, SON, SO, TMP

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.

TheStreet's March Madness Open House Has Begun!
Get an all-access pass now to see everything TheStreet has to offer.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
TAGS: Investing | U.S. Equity

More from Investing

The Bounce in the Market Is Gaining Some Steam

James "Rev Shark" DePorre

Stock picking is starting to look much better.

4 Market Indices Take a Turn

Guy Ortmann

Investor sentiment continues to be overly optimistic and in need of some moderation.

I'm Long Honeywell and I'm Not Selling

Stephen Guilfoyle

My target price has been $260 for HON for some time. I see no reason to change that now.

A Penny for Your Value Investing Thoughts? How About 20 Tons of Them

Jonathan Heller

A huge truckload of copper-rich pennies offers a lesson in the dilemma of locked-up value.

You've Got Volatility 'Covered' With This Strategy

Bret Jensen

This simple option strategy, which I continue to use with small-cap biotechs, is one of the easiest and cheapest risk mitigation approaches an individual can take.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight