Do Dividend Stocks Benefit From Non-US Revenue?

The revenue of US dividend stocks isn’t necessarily made in America.

Why it matters: A portfolio of popular dividend-paying stocks is likely exposed to currency or geopolitical risks. That’s due to international revenue exposure: Some US-based companies earn 50% or more of their money outside of the country. A recent analysis of 35 dividend-paying stocks in Morningstar’s DividendInvestor newsletter found several well-known names generate sizable revenue overseas. So, how should investors balance US versus non-US equity exposure? Morningstar’s DividendInvestor newsletter editor David Harrell explains what investors should know.

8 Questions on International Revenue Exposure of Dividend Stocks

1. You recently analyzed the international revenue exposure of dozens of dividend-paying stocks. But this wasn’t the first time. Why did you decide to revisit this?
2. Let’s dissect the investigation. How did you choose which stocks to focus on, and what was the criteria?
3. How did the recent results compare to the findings in 2021? Were there any surprises?
4. Let’s zoom in on the revenue. Which dividend stocks increased or decreased their US revenue exposure?
5. Morningstar analysts consider some of these dividend payers undervalued. Let’s first focus on names with more US revenue exposure. Who are they?
6. Which companies with more international revenue exposure are undervalued?
7. International stocks are having a long-awaited banner year versus US stocks. Are investors whose only international revenue exposure is these US-based stocks benefiting from this international rally?
8. How should investors balance US versus non-US equity exposure in their portfolios? That is, what if investors looking at their portfolio see that they have home-country bias? What should they consider from a diversification standpoint?

Key Quote on US vs. Non-US Equity Exposure From Dividend Stocks

If you look at dividend-paying stocks in general and sort of the sectors that they’re coming from, you’re going to have some sectors and industries--consumer packaged goods, for example, which tend to have a fair amount of international revenue exposure from some of the big pharmaceutical companies, the same thing, but then you have utilities and such, which are generally popular with dividend-seeking investors, and most of those, unless it’s a non-US utility--all of their revenue is generated in the United States or maybe even a specific region or an individual state in the US.

The Takeaway: David Harrell took a deep dive into international revenue exposure of US dividend stocks, finding that companies in Morningstar’s portfolio had about 33% of their revenues flowing from overseas in 2024. Investing legends John Bogle and outgoing CEO of Berkshire Hathaway, Warren Buffett, argue that US investors don’t need direct international exposure for that very reason, says Harrell. However, Harrell argues that to get the benefits of global diversification, you have to own international stocks directly, because the international revenue exposure only affects the individual company exposure, not your portfolios.

2 Undervalued Dividend Stocks With Only US Revenue Exposure

• Edison International EIX
• Verizon VZ

3 Undervalued Dividend Stocks With More International Revenue Exposure

• Pfizer PFE
• GSK GSK
• Omnicom OMC

Dan Lefkovitz says that investing “is God’s way of teaching Americans geography,” paraphrasing a quote often attributed to satirist Ambrose Bierce. But, what can US investors learn from a volatile year and the outperformance of the international markets? Lefkovitz says that 2025 is the year to invest in international stocks. Find out what’s driving international stocks’ banner year, and why US investors should look beyond the borders.

If you are looking to add international exposure, Amy C. Arnott says it’s not too late. Investors who started the year with a balanced portfolio could still be underweight in international investments. With the decline of the dollar and attractive valuations of international stocks, Arnott says there is still a strong case for global diversification.

Coming up: Learn about the new Morningstar Medalist Ratings for semiliquid funds during a live webinar on Morningstar’s YouTube channel on Wednesday, Sept. 10. CEO Kunal Kapoor and Global Head of Manager Research Laura Lutton will discuss what investors should know about private assets and the first funds to earn the new rating on the Investors First series.