ADRs and reported yield

Dec 09, 2011 1 Replies

For those who do stock screens based on dividend yield, and would consider buying foreign stocks via ADRs/ADSs - I just noticed that both Morningstar and Yahoo Finance (which may use MS, I'm not sure) have some bad data. They may not translate a dividend paid in euros into dollars before calculating yield. So not so hypothetically a 2.70 euro dividend paid on a $91 ADR was shown as a 3% yield, when the actual yield was over 4% - a significant difference.



I contacted Morningstar and they're correcting it for the security I noticed, but I don't know how widespread this is (quick spot-check of three other ADRs - one is right, two are wrong). It's surprising that such established data sources could have a basic error like this.



So dividend hunters, careful when using that data. I've found FT.com to be reliable, including for these ADRs, but the new WSJ.com is spotty - sometimes not even displaying a yield.


-Tad



Another issue with ADRs is a new holding charge just permitted by SEC last month. I may get the details wrong, but normally ADR's deduct a holding fee from your dividends which they would waive for ADRs not giving dividends. Last month brokerages started charging "negative" ADR dividends. So if you are penny wise and pound foolish like me, you will dump your ADRs.

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