Australia’s economy has been one of the strongest in the world, having not had a recession for 25 years. This has consequently helped the Australian stock market be one of the best performers as well.
Stocks that benefit from a strong Australia like Commonwealth Bank of Australia (ASX: CBA), REA Group Limited (ASX: REA) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) have all enjoyed bumper returns over the last 10 years.
But Australia isn’t the only place to generate revenue for ASX-listed businesses, with some actually being based overseas but listed here on the ASX.
Below are three of the best stocks on the ASX that mostly earn from overseas:
Auckland International Airport Ltd (ASX: AIA)
This business is not only responsible for the Auckland Airport but it also owns 24.99% of Queenstown Airport and 24.55% of Queensland airports Mackay and Cairns.
There is a large boom in tourism to New Zealand and Australia, therefore a lot of these passengers will have to fly to Auckland Airport to travel to the rest of New Zealand. In FY16 the number of Chinese passengers arriving in Auckland Airport grew by 22.9% from 292,435 to 359,270 and this trend is expected to keep growing.
The share price has dropped by 11% since 2 September 2016 because of the increase in bond rates, which has made its shares trade at more attractive levels.
Auckland Airport is trading at 34x FY17’s estimated earnings with a dividend yield of 2.49%.
Gentrack Group Ltd (ASX: GTK)
Gentrack is a New Zealand-based software provider to electricity, gas and water utility companies as well as airports.
Its reoccurring revenue makes it a pretty defensive choice yet it is on course for quite strong growth over the coming years. There is a good chance that it could expand its offering to other companies and countries, further boosting growth.
In FY16 it grew revenue by 25% and its net profit after tax by 3%. It’s currently trading at 24x FY16’s earnings with a dividend yield of 3.61%.
Henderson Group plc (ASX: HGG)
Henderson is a fund manager based in the UK that is one of the few ways to gain exposure to the UK economy on the ASX.
However, it’s in the process of merging with Janus Capital Group Inc. from America, forming a large fund manager with assets under management of over US$320 billion. It will have a strong presence in the UK and North America once the merger is completed.
Henderson would provide international diversification and one day it may try to acquire a large Australian fund manager too, which would make it a truly global player.
Henderson is trading at 13.2x FY17’s estimated earnings with a dividend yield of 4.97%.
Any of these would be decent choices for some overseas exposure and all three are on my watch list. The cheaper Auckland Airport gets the more excited I am by it. If the share price goes below $5.50 I’ll be very interested as it could be a great dividend pick at that price.
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Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia owns shares of Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.