What are we looking for?
Credit ratings are intended to provide a guide to the quality of a company’s debt, but they can also provide important clues about the attractiveness of a company’s stock, since firms with the highest credit ratings tend to be more financially stable than those lower down the scale.
Today, with the help of Jamie Hynes, sales director with S&P Capital IQ, we look around the world for companies with healthy credit profiles as well as other attractive characteristics.
How we did it
Under S&P’s credit rating system, grades range from AAA (extremely strong capacity to meet financial commitments) to BBB-minus (considered the lowest investment grade by market participants).
Last week, Mr. Hynes looked for Canadian companies with strong credit ratings. For today’s offering, he tweaked that screen, which combined Standard & Poor’s Entity Credit Ratings with S&P Capital IQ financial data, to search for companies on any major global exchange with AA- credit ratings or better.
Seventy-one stocks met this requirement, so he narrowed the search to companies with $1-billion or more in market capitalization, and:
- a dividend yield of at least 2 per cent;
- earnings that have grown over the past year;
- a price-to-earnings ratio of no more than 15;
- an average analyst recommendation of “hold” or better.
More about S&P Capital IQ
S&P Capital IQ offers a comprehensive set of tools for fundamental analysis of global securities as well as idea generation and workflow management. Its Web- and Excel-based platform provides access to both real-time and historical information on companies, markets, transactions and people around the world.
What we found
Twenty companies, including three Canadian banks, have a AA- credit rating or better and also meet our additional criteria. Their average price change, year to date, is 18.3 per cent – handily beating the 11.8 per cent return for the MSCI World Index.
As always, you should do your own research before buying any of the stocks listed here.
International stocks with the highest 'investment grade' credit rating
|Exxon Mobil Corp.||XOM-N||U.S.||87.28||AAA|
|Nippon Telegraph & Telephone||9432-TOKYO||Japan||43.66||AA|
|Wal-Mart Stores Inc.||WMT-N||U.S.||71.23||AA|
|Australia & New Zealand Banking||ANZ-AUSTR.||Australia||25.73||AA-|
|China Mobile Limited||941-HK||Hong Kong||11.28||AA-|
|CME Group Inc.||CME-Q||U.S.||53.37||AA-|
|East Japan Railway Co.||9020-TOKYO||Japan||65.53||AA-|
|Nordea Bank AB||NDA-SEK-SWEDEN||Sweden||9.09||AA-|
|Osaka Gas Co., Ltd.||9532-TOKYO||Japan||3.87||AA-|
|Royal Bank of Canada||RY-T||Canada||58.51||AA-|
|Seven & I Holdings Co.||3382-TOKYO||Japan||28.95||AA-|
|Swiss Re Ltd||SREN-SWITZ.||Switzerland||70.55||AA-|
|The Bank Of Nova Scotia||BNS-T||Canada||55.94||AA-|
|Tokyo Gas Co. Ltd.||9531-TOKYO||Japan||4.82||AA-|
* Long term local currency rating; ** Broker Recommendations: 1=Buy; 3=Hold; 5=Sell; Source: S&P Capital IQ
EPS 1 Yr
|Exxon Mobil Corp.||XOM-N||U.S.||87.28||397,948||AAA||2.6||9.4||14.2||2.1||4.31|
|Nippon Telegraph & Telephone||9432-TOKYO||Japan||43.66||53,347||AA||4.4||9.7||0.1||2.3||-7.24|
|Wal-Mart Stores Inc.||WMT-N||U.S.||71.23||238,279||AA||2.2||14.8||9.7||2.4||20.7|
|Australia & New Zealand Banking||ANZ-AUSTR.||Australia||25.73||69,212||AA-||5.8||12.1||3.4||2.5||21.2|
|China Mobile Limited||941-HK||Hong Kong||11.28||226,727||AA-||3.7||11.6||2.8||2.7||17.4|
|CME Group Inc.||CME-Q||U.S.||53.37||17,793||AA-||3.3||12.4||17.8||2.5||10.9|
|East Japan Railway Co.||9020-TOKYO||Japan||65.53||25,948||AA-||2.2||13.6||216||1.8||10.6|
|Nordea Bank AB||NDA-SEK-SWEDEN||Sweden||9.09||36,548||AA-||3.7||9.6||16.9||2.3||15.7|
|Osaka Gas Co., Ltd.||9532-TOKYO||Japan||3.87||8,057||AA-||2.5||10.3||72||2.4||7.24|
|Royal Bank of Canada||RY-T||Canada||58.51||84,565||AA-||4.1||11.8||9.2||2.5||12.6|
|Seven & I Holdings Co.||3382-TOKYO||Japan||28.95||25,582||AA-||2.6||14.8||40.7||2||13.8|
|Swiss Re Ltd||SREN-SWITZ.||Switzerland||70.55||24,228||AA-||4.4||6.1||341.2||2.7||39.3|
|The Bank Of Nova Scotia||BNS-T||Canada||55.94||66,269||AA-||4.1||10.6||15.2||2||10.1|
|Tokyo Gas Co. Ltd.||9531-TOKYO||Japan||4.82||12,385||AA-||2.2||11.4||44||1.9||14.7|
- Exxon Mobil Corp$82.00+0.24(+0.29%)
- Wal Mart Stores Inc$70.12-0.13(-0.19%)
- 3M Co$192.70+0.48(+0.25%)
- CME Group Inc$119.88+0.55(+0.46%)
- Royal Bank of Canada$96.82+1.61(+1.69%)
- Bank of Nova Scotia$77.62+0.72(+0.94%)
- Toronto-Dominion Bank$65.43+0.71(+1.10%)
- Updated March 23 2:29 PM EDT. Delayed by at least 15 minutes.