Australia has a small population compared to most other western economies, which means it has a much smaller market to expand into.
Therefore a lot of Australian companies reach a ceiling quite quickly and the only way to keep growing is to expand overseas. Going to New Zealand is a fairly simple step, but it's the businesses that expand into major markets that can truly become global companies.
In my opinion, these are three of the strongest ASX companies with overseas operations:
Carsales.Com Ltd (ASX: CAR)
Carsales owns Australia's largest vehicle sales website with a market capitalisation of $2.6 billion.
It has been the market leader in Australia for a while, so shareholders shouldn't expect much growth from this division. The international division could drive growth for the next few years.
It acquired an 83% stake in Chileautos and a 65% stake of SoloAutos in Mexico. The international division grew revenue by 54% in FY16 and could have more strong growth in FY17.
Carsales is trading at 22.9x FY17's estimated earnings with a grossed up dividend yield of 5.05%.
Cochlear Limited (ASX: COH)
Cochlear is one of Australia's largest healthcare companies with a market capitalisation of $7 billion. It is the business behind the Nucleus implant, the Hybrid electro-acoustic implant and the Baha bone conduction implant.
With 45% of revenue coming from the Americas and 37% from Europe, Middle East and Africa, it is definitely a global company.
In FY16 it grew revenue by 23%, net profit after tax by 30% and the dividend by 21%, a great result for a company of Cochlear's size.
It's currently trading at 32.4x FY17's estimated earnings with a grossed up dividend yield of 2.55%.
Treasury Wine Estates Ltd (ASX: TWE)
Treasury Wine Estates is Australia's listed wine giant with brands such as Penfolds and Yellowglen, it has a market capitalisation of $8.2 billion.
The Australia & New Zealand region is the third highest earning region for Treasury Wine Estates, with the Americas and Asia earning more. Thanks to its purchase of Diageo Wine, it managed to more than double its net profit after tax and earnings per share with the dividend increasing by 43% last year.
Treasury Wine is trading at 29.6x FY17's estimated earnings with a dividend yield of 1.81%.
Foolish takeaway
These three are showing a lot of the ASX how to expand overseas. Of the three, Cochlear is my favourite with its defensive characteristics and growing recurring revenue. If you want another stock with growing overseas operations but a big dividend, check out this stock.
