A lack of diversification in your portfolio could leave you exposed to market-related risks. Often, what investors do to diversify is spread their investments out across several different industries. The problem is that if the economy as a whole is struggling, the impact can often be felt across many industries.
This is why investing in different regions of the world is important, because it will add another way for you to diversify your holdings, and it will make your portfolio less exposed to the domestic market.
Below are three stocks that will provide you with great ways to invest in other economies, while also adding more diversification to your portfolio.
Dream Global REIT (TSX:DRG.UN) gives you an opportunity to invest in several different European countries, including Germany, Austria, Belgium, and the Netherlands. The company’s properties total more than 12 million square feet and occupancy rates are normally ~90%.
Although the company did not see much sales growth last year, its revenues have been over $200 million in each of the past four years, and profits have been very strong.
Dream Global also trades at low multiples, making it an attractive buy for value investors. With a price-to-earnings ratio of less than 10, and the share price trading a little more than book value, the stock is very well priced given the growth opportunities it possesses. It also provides investors with a great dividend.
Fairfax India Holdings Corp. (TSX:FIH.U) gives investors an opportunity to benefit from one of the world’s largest growing economies. Fairfax India invests in various different Indian businesses, and it even has an interest in the Bangalore International Airport, one of the country’s largest airports.
In the past year, Fairfax’s stock has risen more than 55% and still trades at only seven times its earnings and a little more than book value. The stock provides good value for investors, and unlike with a REIT, the company invests in a wide variety of businesses that will benefit from a growing economy.
NorthWest Health Prop Real Est Inv Trust (TSX:NWH.UN) is another REIT, but this one focuses on healthcare properties in various parts of the world. The company isn’t focused on any one continent, as properties are located in Canada, Germany, Brazil, Australia, and New Zealand.
This broad portfolio of assets gives investors a lot of geographical diversification, and it also avoids having to rely on shopping centres or apartment buildings for growth. Healthcare facilities provide a lot of stability and will also be more in demand as populations continue to grow and age.
Last year, NorthWest achieved sales growth of just under 40% and has seen that continue this year with its most recent quarter showing revenues up more than 26%.
In the last 12 months, the share price has increased 12%, and with a 7% yield, investors have many opportunities to generate strong returns from this investment. The stock offers good value to investors, as the shares trade at just 1.2 times book value and less than eight times earnings.
NorthWest offers you a great way to diversify your holdings by not only investing in a broad range of countries, but also in a much more stable industry than most REITs typically rely on.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor David Jagielski has no position in any of the stocks mentioned. NorthWest Health is a recommendation of Stock Advisor Canada. Dream Global REIT is a recommendation of Dividend Investor Canada.