- Direct purchase via international accounts with American brokers
- Investment through BDRs (Brazilian Depositary Receipts) on B3
- International ETFs focused on dividends
- Brazilian investment funds focused on international stocks
- Brazilian platforms with direct access to the American market
Investing in stocks that pay dividends in dollars has become an essential strategy for Brazilian investors seeking protection against the devaluation of the real and international diversification. This comprehensive learn analyzes the best options in the market, investment strategies, and tax considerations specific to the Brazilian context.
The current scenario for international dividend investments
The market for stocks that pay dividends in dollars represents a unique opportunity for Brazilian investors who seek not only regular income but also protection against domestic economic instability. With the volatility of the Brazilian real in recent years, diversifying investments in hard currency has become a strategy not only for growth but for capital preservation.
Pocket Option has observed a significant increase in Brazilian investors’ interest in assets that combine the security of the dollar with the regularity of dividends. This trend reflects a fundamental shift in the mindset of the national investor, who increasingly understands the importance of international diversification.
When analyzing market behavior in recent quarters, we have noticed that stocks that pay dividends in dollars have shown resilience even during periods of turbulence in global markets. This is mainly because companies with a consistent history of dividend payments usually have stable business models and predictable cash flows.
Why invest in stocks that pay dividends in foreign currency?
Investing in stocks that pay dividends in dollars offers multiple advantages for the Brazilian investor. Beyond the obvious currency protection, there are significant strategic benefits that deserve consideration:
| Benefit | Impact for the Brazilian investor |
|---|---|
| Currency protection | Natural hedge against devaluation of the real |
| Geographic diversification | Reduced exposure to specific risks of the Brazilian market |
| Access to sectors underrepresented in Brazil | Exposure to technology, healthcare and other sectors with little presence on B3 |
| Predictable income flow | Easier financial planning with regular income |
| Potential for dollar appreciation | Additional gains during periods of strengthening of the American currency |
Analysis by Pocket Option experts indicates that investors with a long-term horizon can benefit significantly from exposure to dividends in hard currency, especially considering the history of devaluation of the real against the dollar in recent decades.
The correlation between dollar dividends and asset protection
An often underestimated aspect of investing in stocks that pay dividends in dollars is their function as a wealth protection mechanism. Unlike other hedging strategies, which can have high costs or require constant monitoring, dollar dividends offer natural and passive protection.
When we analyze periods of economic crisis in Brazil, such as in 2015-2016 or during the pandemic in 2020, we observe that investors with exposure to dollar dividends were better able to preserve their purchasing power. This factor becomes even more relevant in a scenario of global uncertainties and inflationary pressures.
How to access American dividend stocks through the Brazilian market
For Brazilian investors interested in stocks that pay dividends in dollars, there are multiple access routes, each with its particularities. Pocket Option has identified the main forms of investment currently available:
Each modality has specific advantages that may better suit each investor’s profile. For example, BDRs offer the convenience of trading in reais on the Brazilian stock exchange, while international accounts provide direct access to the full range of American assets.
| Access modality | Advantages | Disadvantages |
|---|---|---|
| International account | Access to all assets, direct dividends | Greater tax complexity, documentation in English |
| BDRs | Ease of trading in reais, familiar to Brazilians | Limited supply of companies, additional costs |
| International ETFs | Instant diversification, low cost | Less control over specific companies |
| Brazilian funds | Professional management, tax simplicity | Higher management fees |
The specific case of BDRs for Brazilian investors
BDRs deserve specific analysis as they are an accessible bridge between the Brazilian investor and stocks that pay dividends in dollars. Since these instruments were opened to retail investors in 2020, their popularity has grown exponentially.
However, it is crucial to understand the particularities of BDRs in relation to dividends. For example, when an American company distributes dividends, these are converted to reais before reaching the Brazilian investor. In addition, there is a withholding tax in the US (usually 30%, which can be reduced to 15% for Brazilian residents through agreements to avoid double taxation).
The best stocks that pay monthly dividends in dollars
For investors seeking regular income flow, stocks that pay monthly dividends in dollars represent an especially attractive category. Although less common than those that pay quarterly (standard in the American market), there are interesting options in this segment.
Pocket Option analyses have identified companies and REITs (Real Estate Investment Trusts) that maintain a monthly distribution policy and have a consistent payment history:
| Company/REIT | Sector | Average Dividend Yield | Payment History |
|---|---|---|---|
| AGNC Investment Corp. | REIT (mortgages) | 8-12% | More than 10 years of monthly dividends |
| Realty Income Corp. | REIT (commercial real estate) | 4-5% | More than 25 years of growing monthly dividends |
| LTC Properties | REIT (healthcare) | 5-7% | Extensive history of monthly payments |
| STAG Industrial | REIT (industrial) | 3-5% | Monthly dividends since 2013 |
It is important to note that some of these assets, especially REITs, have differentiated tax treatment both in the US and in Brazil. Pocket Option’s specialized consulting can help investors navigate these fiscal complexities.
Advanced strategies for investing in American dividend stocks
Beyond simply buying and holding stocks that pay dividends in dollars, there are more sophisticated strategies that can enhance results. Experienced investors have implemented approaches that combine passive income with growth and protection:
- Dividend Growth Investing: focus on companies with a history of consistent dividend increases
- Dividend Capture: strategy of buying before the ex-dividend date and selling afterward
- Sector Diversification: distributing investments across different sectors to mitigate risks
- Automatic Reinvestment: dividend reinvestment program to accelerate wealth growth
- Combination with options strategies: use of covered options to increase yield
The Dividend Growth strategy deserves special highlight. Companies known as “”Dividend Aristocrats”” (those that have increased their dividends for at least 25 consecutive years) have demonstrated superior performance to the market in the long term, combining appreciation with growing returns.
| Strategy | Risk profile | Time horizon | Suitability for Brazilians |
|---|---|---|---|
| Dividend Growth | Moderate | Long term (10+ years) | High – protection against inflation and exchange rate |
| Dividend Capture | High | Short term (days/weeks) | Low – transaction costs and fiscal complexity |
| Yield focused | Moderate-High | Medium term (3-5 years) | Medium – good for income, but risks of dividend traps |
| Covered options | Moderate | Medium term (1-3 years) | Medium – requires specific knowledge |
Building a resilient international dividend portfolio
Building a balanced portfolio of stocks that pay dividends in dollars should consider not only current yields but also the sustainability of these dividends and growth potential. Pocket Option experts recommend a multifactorial analysis:
- Sustainable payout ratio (percentage of profit distributed as dividend), preferably below 75%
- History of growing dividends for at least 5-10 years
- Solid balance sheet with manageable debt levels
- Business model resilient to economic cycles
- Clear competitive advantages in the sector
A balanced approach combines companies of different profiles: some with higher yields (such as utilities and REITs) and others with more significant dividend growth rates (such as technology and healthcare).
Relevant tax and exchange aspects for Brazilians
Taxation is a fundamental aspect when investing in stocks that pay dividends in dollars. For Brazilian investors, this topic has particularities that directly impact the net return on investments.
| Tax aspect | Impact for the Brazilian investor | Strategic considerations |
|---|---|---|
| US withholding tax | 30% on dividends, can be reduced to 15% | Filling out the W-8BEN form to apply the reduced rate |
| Taxation in Brazil | 15% on capital gain on sale | Exemption for monthly sales up to R$35,000 (stocks abroad) |
| BDR taxation | 15% on capital gain + Income tax on dividends | Treatment similar to Brazilian stocks |
| Exchange rate variation | Gains/losses due to dollar fluctuation | Exchange gains are taxable above USD 35,000/month |
A frequently neglected point is the declaration of assets abroad. Brazilian investors with more than USD 100,000 in assets abroad must submit the Brazilian Capital Abroad Declaration (CBE) to the Central Bank, in addition to the obligation to declare all investments in Income Tax.
Pocket Option recommends consulting an accountant specialized in international investments to optimize the tax structure and ensure compliance with Brazilian and American legislation.
Comparison: American stock dividends vs. Brazilian stocks
A comparative analysis between American and Brazilian stock dividends reveals important structural differences that impact investment strategy. Understanding these distinctions is fundamental to building a truly diversified portfolio.
| Characteristic | American market | Brazilian market |
|---|---|---|
| Payment frequency | Predominantly quarterly | Varied (monthly, quarterly, biannual, annual) |
| Predictability | High – schedule announced in advance | Medium – greater variability in payments |
| Taxation | Withholding tax + Income tax in Brazil | Income tax exemption on dividends |
| Historical growth | Culture of consistent increases (Dividend Aristocrats) | Greater variability, influenced by economic cycles |
| Average dividend yield | 1.5-3% (S&P 500) | 3-7% (IBOVESPA) |
An interesting aspect in this comparison is the cultural difference in the treatment of dividends. While in the American market consistency and dividend growth are highly valued by investors, in Brazil the focus tends to be more on the current yield than on the sustainability of the dividend.
Pocket Option analyses indicate that a balanced portfolio, combining stocks that pay dividends in dollars with dividends from Brazilian companies, can offer the best of both worlds: currency protection and potentially higher yields.
Future trends for international dividend investments
The market for stocks that pay dividends in dollars is constantly evolving, influenced by macroeconomic trends, regulatory changes, and innovations in business models. Pocket Option experts identify some trends that should shape this sector in the coming years:
- Growing interest in dividends in the technology sector, historically focused on growth
- Impact of monetary policies and interest rates on dividend-paying companies
- New platforms facilitating Brazilian access to the international market
- Fiscal harmonization between countries, potentially reducing double taxation
- Increased supply of BDRs in the Brazilian market, expanding access to international dividends
A particularly relevant trend for Brazilian investors is the growing integration between markets. With the simplification of processes and reduction of costs to invest internationally, the entry barrier to access stocks that pay dividends in dollars has decreased significantly.
Conclusion: Integrating international dividends into the Brazilian investor’s strategy
Investing in stocks that pay dividends in dollars represents much more than a simple portfolio diversification for the Brazilian investor. It is a comprehensive strategy of wealth protection, passive income generation, and exposure to markets and sectors with dynamics different from the national scenario.
The detailed analysis conducted by Pocket Option demonstrates that, despite tax and operational complexities, the long-term benefits justify the inclusion of these assets in a diversified portfolio. Protection against devaluation of the real, combined with exposure to globally competitive companies, creates a balance that would be difficult to achieve with exclusively domestic investments.
The current moment, with greater ease of access to international markets and growing supply of instruments such as BDRs, represents a unique opportunity for Brazilian investors to build a robust and resilient strategy based on international dividends.
For those seeking to navigate this complex but rewarding universe of stocks that pay dividends in dollars, Pocket Option offers educational tools, specialized analyses, and support for implementing personalized strategies adapted to the reality and objectives of each investor.
FAQ
What are the costs involved for Brazilians investing in stocks that pay dividends in dollars?
Costs include brokerage fees (ranging from $0 to $20 per operation depending on the platform), exchange rate spread (0.5% to 2% when converting reals to dollars), international transfer costs (if applicable), custody fees (generally annual, between 0.1% and 0.5% of assets) and taxes (15% income tax on capital gains in Brazil and withholding tax in the US, generally 15% for Brazilians with proper documentation). Pocket Option offers some of the most competitive rates in the market for Brazilians to access American stocks.
How to receive dividends from American stocks as a Brazilian?
To receive dividends from American stocks, the Brazilian investor needs to: 1) Open an account with a broker that operates in the American market; 2) Fill out the W-8BEN form to apply the reduced withholding tax rate (15% instead of 30%); 3) Buy the desired stocks; 4) Dividends will be automatically deposited in the investment account, with tax already withheld; 5) These amounts can be kept in dollars, reinvested, or converted to reals and repatriated. Alternatively, investors can buy BDRs on B3, receiving dividends already converted to reals.
What are the best stocks that pay monthly dividends in dollars for beginners?
For beginners, we recommend REITs with consistent monthly payments and stable businesses such as Realty Income (ticker: O), known as "The Monthly Dividend Company" with over 25 years of growing dividends; STAG Industrial (STAG), focused on industrial properties; and Main Street Capital (MAIN), a BDC (Business Development Company) with a solid track record. It's also worth considering ETFs like JEPI (JPMorgan Equity Premium Income ETF) which distributes monthly income. Beginners should prioritize companies with simple business models and proven payment history, even if the yield isn't the highest in the market.
What is the taxation of American dividends for Brazilians?
The taxation of American dividends for Brazilians occurs on two fronts: 1) In the US, there is a 30% withholding tax, which can be reduced to 15% by filling out the W-8BEN form; 2) In Brazil, dividends received from foreign companies are exempt from additional income tax. However, the currency appreciation on the principal invested may be taxed if it exceeds USD 35,000/month. For BDRs, the treatment is similar to Brazilian stocks, with dividends already arriving with US tax withheld. It's important to consult with a specialized accountant, as tax legislation may change.
How to build a balanced portfolio of dollar dividend-paying stocks?
A balanced portfolio of stocks that pay dividends in dollars should follow a few principles: 1) Sector diversification (including companies from different sectors such as healthcare, technology, consumer goods, finance, and energy); 2) Combination of different profiles (some with higher yield like REITs and utilities, others with lower yield but greater growth potential like technology); 3) Focus on companies with sustainable payout ratio (generally below 60-70%); 4) Inclusion of "Dividend Aristocrats" (companies with a history of increasing dividends for 25+ consecutive years); 5) Allocation of 5-15% in each position to mitigate specific risks. Pocket Option recommends starting with diversified ETFs like SCHD or HDV before selecting individual stocks.