US stocks are a must have for any stock market investor.Indeed, they alone represent over 50% of the world's market capitalization! It is therefore impossible to have a truly diversified stock market portfolio without owning American equities.
Be careful, however, brokerage fees can quickly turn out to be excessive if you do not choose your broker well. In addition, it is not necessarily easy for a European investor to choose his broker.
Which US stocks offer the best dividends?
While the US market is full of companies that are attractive to investors, they do not all offer the same return, and do not have the same policy regarding the payment of dividends.
There are two broad categories for ranking the US companies with the best dividend payout records.
The Dividend Kings
“Dividend Kings” are companies that have increased their dividend for at least 50 consecutive years. They are now 31 in number.
You will find among them companies like:
- Altria
- Black hills
- 3M
- Johnson & johnson
- Coca Cola
- ...
The Dividend Aristocrats
The “Dividend Aristocrats” group brings together companies that have increased their dividend for at least 25 consecutive years, that meet certain size and liquidity criteria, and that is part of the S&P 500.
This last condition explains the fact that some companies are part of the Dividend Kings, but not the Dividend Aristocrats.
Today there are 66 companies in this category, including:
- Walmart
- McDonald's
- Medtronic
- Stanley Black & Decker
- PepsiCo
- ...
How to buy US stocks? Best American Equity Broker?
To buy US stocks, you have two main options: buy stocks directly, or via funds (trackers or active funds).
Depending on the solution you choose, you will need to find out about the offers offered by brokers. Use our method to choose a broker. Some are much more competitive than others in the US stock market, so the brokerage fees charged can make a significant difference.
So who is the best stockbroker for the European market? Today we recommend, without hesitation, Degiro for French nationals. Brokerage fees are very low and access to US stocks is very broad.
It will also be necessary to adapt to the opening hours of the American stock exchange, in order to carry out your operations in this time slot.
The economic calendar can also be of great help to you, in particular to identify the holidays during which the American markets will be closed.
To buy NASDAQ or American stock exchange stocks, you will need a good stock broker
Buy US stocks live
If you want to buy US stocks live, you will need to do a full analysis of those you are interested in beforehand.
Indeed, it is important to invest in solid companies, which will give you confidence in your investments, and will offer you interesting returns over the long term.
You will be able in particular to study the results of the company (evolution of turnover, profits ...), its debt ratio, its history of dividend distribution, the functioning of its management team, its axes and development opportunities ...
It will also be necessary to ensure to gain shares of companies operating in different sectors of activity, with a view to diversification.
Use trackers
If you choose to opt for trackers, or ETFs, you can easily gain many of the US stocks, with only a few lines to manage in your portfolio.
In particular, you can choose a tracker that tracks the MSCI USA or the S&P 500 for large caps, as well as a tracker following the Russell 2000 for small caps.
By proceeding like this, you cover almost the entire American equity market with only 2 trackers, and you thus ensure that you have a sufficiently diversified portfolio at low cost, and with simplified management.
Choose active funds
You could also choose to go through so-called "active" funds, which aim to beat the market.
However, this solution is quite unattractive in reality, as the costs of these funds are much higher than those of trackers, and only a tiny proportion of managers beat the market.
According to a SPIVA study, at the end of 2019, less than 2% of active funds were doing better than the S&P 500 over 10 years.
Conclusion on US equities
In conclusion, buying US stocks requires, as with all stocks, to make a judicious selection.
Selecting stocks from companies that are part of the Dividend Kings or Dividend Aristocrats ensures you are investing in solid, proven companies.
Going through trackers can also be a very relevant solution for an investor wishing to have a diversified portfolio, while devoting relatively little time to it, with a rather passive approach.
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