When companies like Pfizer, Philip Morris, and Colgate sell their products in foreign markets, they price them in euros, Japanese yen, Australian dollars or Brazilian reals. But when it comes time to tally those sales and bring the money home, they get translated back into U.S. dollars.
Result: A weaker greenback means these companies collect more dollars on every foreign sale. Moreover, this same phenomenon allows U.S. companies to charge less for their products in foreign markets and STILL get the same dollar amount in sales. That makes the companies more competitive on the world stage.
Please note that it’s not one particular industry that benefits from this phenomenon. Pharmaceutical firms … tobacco concerns … toothpaste makers … they all gain from a falling dollar as long as they’re selling a lot of goods overseas.
Even a U.S. engineering firm that did a project in London would benefit from a weaker dollar. Of course, it helps that the three companies mentioned today boast world famous, market-leading brands. After all, even during a recession (in the U.S. or a foreign country!) consumers will still take their medicine, smoke, and brush their teeth. That gives these firms steady demand around the world, no matter what.
Find out how other dividend stock companies bank big from a weak dollar.
To your investing success,
InvestingInDividends.com
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