Gaining investment exposure outside of Australia should be a no brainer. However, if you don’t wish to invest in country exchange-traded-funds (ETFs) or have international shares held by a custodian, I believe choosing to invest in companies that generate a significant amount of their annual income from outside Australian boarders is a fantastic third option.
Here are 5 shares on the S&P/ASX 200 (INDEXASX: XJO) that fit the bill.
Treasury Wine Estates Ltd (ASX: TWE)
Treasury Wine is one of the world’s leading wine companies. It has a portfolio of brands including Penfolds, Wynns, Wolf Blass and many more and is sold in more than 100 countries. Thanks to its global presence, it generates 79% of net sales revenue outside of Australia and New Zealand. This global presence has been generating exceptional growth, largely thanks to its expanding margins and the rise of the Chinese middle class. Here, the Chinese 5-year compound annual growth rate (CAGR) in wine consumption is forecasted to be 9.8%.
Corporate Travel Management Ltd (ASX: CTD)
Corporate Travel Management is a global leader in business travel management. It has been expanding rapidly through acquisitions largely due to a fragmented global market, with its most recent acquisition being Texas-based Corporate Travel Planners Inc.
CTD managed to grow its revenue by 21% in FY19, generating just over 72% of this outside of the ANZ region. This percentage generated overseas is slightly up from the FY18 figure of 70% as they tap into the larger overseas markets.
Macquarie Group Ltd (ASX: MQG)
Macquarie is one of the 10 largest companies listed on the ASX. It has a diverse business mix where it manages to generate 66% of its income internationally. This is thanks to its focus on international investment banking. Macquarie now has offices in 30 markets with roughly an even split in profit contribution by business type, with 53% of profits coming from annuity-style contributions and 47% from market-facing.
ResMed Inc (ASX: RMD)
ResMed is a global medical devices company focusing on respiratory disorders and is listed on both the New York Stock Exchange (NYSE) and the ASX as a CHESS Depositary Instrument (CDI), where a CDI represents 1/10 of a share.
RMD generates the majority of its revenue in the United States (US), with 54% of revenue coming from America Sleep and Respiratory Care and 13% from subscription software. Interestingly, Europe, Asia and Other (which is where Australia sits) accounts for only 33% of total revenues. This gives the ASX investor great exposure to overseas economies.
Ramsay Health Care Limited (ASX: RHC)
Ramsay is Australia’s largest private hospital operator and the 29th largest company listed on the ASX by market cap. Thanks to its recent Capio acquisition, it now earns just over half of its revenue outside of Australia/Asia. Additionally, it now operates in a total of 11 countries, which offers great global exposure. This exposure offers great diversification in a defensive industry and should benefit from the ageing demographic.
Looking for companies with global income on the ASX is a great way to gain exposure to overseas markets. It also has the added benefit of not requiring a direct investment in another country and provides earnings diversification. This can help protect against any single struggling economy and also provides the company with more growth opportunities.
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Motley Fool contributor Michael Tonon owns shares in ResMed Inc. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, Macquarie Group Limited, and Treasury Wine Estates Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited and ResMed Inc. 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 Scott Phillips.