The 8 Best Dividend Stocks In Mexico

Last Updated on April 18, 2023

The economic situation in Mexico is characterized by a combination of macroeconomic stability, structural reforms, and sustained growth. Mexico has seen strong economic growth in recent years and is considered one of the most prosperous countries in Latin America. It has achieved a high level of development, which is evidenced by its low poverty rate, high life expectancy, and high education level.

Mexico is the 15th largest economy in the world and the 11th largest by purchasing power parity. It is the world’s second-largest economy in Latin America after Brazil, and the second-largest economy in the world among emerging markets. Mexico has a diversified and open economy, with a strong emphasis on services, manufacturing, and construction. Over the past two decades, the country has seen rapid economic growth and sustained development.

However, Mexico is facing several economic challenges. Its growth rate has been slower than many of its Latin American neighbors, and poverty and inequality remain a major concern. In addition, the country’s public debt has ballooned in recent years, while inflation and unemployment remain high. In addition, the country’s dependence on the United States for trade and investment has left it vulnerable to changes in the U.S. economy.

In spite of these challenges, Mexico has made strides in recent years to address its economic issues. It has implemented a range of reforms, including market-oriented policies, fiscal responsibility, and tax reforms. It has also implemented social programs aimed at reducing poverty and inequality, and boosting economic growth. Mexico is also looking to diversify its economy, by expanding its export markets and attracting foreign direct investment.

Overall, the economic situation in Mexico is improving and is expected to continue growing in the years ahead. However, the country still faces a number of challenges, and will need to continue making reforms to ensure sustainable and inclusive growth.

The 8 Best dividend stocks in Mexico

1. America Movil:
America Movil is the largest telecommunications services provider in Mexico and Latin America. It offers a wide range of services including mobile, landline and broadband services as well as pay television services. The company has a strong dividend policy and has paid out a dividend every year since 2003. The current dividend yield is 5.47%.

2. GrupoMexico:
GrupoMexico is one of the largest mining companies in the world, providing copper, zinc and other metals. The company has a long-standing dividend policy and has paid a dividend every year since 2002. The current dividend yield is 4.51%.

3. Grupo Bimbo:
Grupo Bimbo is the largest baker in Mexico and Latin America. It has a long-standing dividend policy and has paid a dividend every year since 2002. The current dividend yield is 2.62%.

4. Walmex:
Walmex is one of the largest retail companies in Mexico and Latin America. It offers a wide range of products including clothing, food, electronics, books, and more. The company has a long-standing dividend policy and has paid a dividend every year since 2003. The current dividend yield is 1.68%.

5. Cemex:
Cemex is one of the largest cement companies in the world and has a presence in Mexico and Latin America. The company has a long-standing dividend policy and has paid a dividend every year since 2004. The current dividend yield is 2.37%.

6. Femsa:
Femsa is one of the largest beverage companies in Mexico and Latin America. The company has a long-standing dividend policy and has paid a dividend every year since 2003. The current dividend yield is 1.78%.

7. Grupo Televisa:
Grupo Televisa is the largest media company in Mexico and Latin America. It offers a wide range of services including television, radio, publishing and digital media. The company has a long-standing dividend policy and has paid a dividend every year since 2002. The current dividend yield is 1.73%.

8. GBM Grupo Bursatil Mexicano:
GBM Grupo Bursatil Mexicano is one of the largest financial services companies in Mexico. It offers a wide range of services including banking, insurance and investments. The company has a long-standing dividend policy and has paid a dividend every year since 2003. The current dividend yield is 1.

What is the average dividend yield historically in Mexico?

The average dividend yield in Mexico has historically been quite low compared to other countries. According to data from Morningstar, the average dividend yield in Mexico over the past 10 years (2009-2019) was 2.83%, which is significantly lower than the global average of 3.31%, and lower than the United States’ average of 2.98%.

However, the dividend yield in Mexico has been steadily increasing in recent years due to economic growth and increased investor confidence. In 2018, the average dividend yield in Mexico rose to 4.08%, the highest it has been in over a decade. This increase in dividend yield was driven by various factors, including improved corporate governance, higher dividend payouts from Mexican companies, and the introduction of the new tax reform in 2018.

Despite the recent increase in dividend yield, Mexico still lags behind most developed countries in terms of dividend yields. This is due to the fact that Mexican companies tend to reinvest their earnings instead of paying out dividends to shareholders. As such, investors looking for high dividend yields should look elsewhere.

Pros and cons of buying dividend stocks in Mexico

Pros:

1. Attractive Yields: One of the greatest advantages of buying dividend stocks in Mexico is the attractive yields that they offer. Mexican stocks generally pay higher dividends than U.S. stocks, making them an attractive option for income-oriented investors. This can be particularly beneficial for retirees who need to supplement their fixed income or investors who want to build up a stream of passive income.

2. Diversity: Owning dividend stocks in Mexico can provide investors with a more diversified portfolio. The Mexican stock market is much smaller than the U.S. stock market, so by investing in Mexican stocks investors can gain exposure to different sectors and companies not available in the U.S.

3. Tax-Efficient: Dividend payments from Mexican stocks are generally tax-free in the U.S., providing investors with an additional tax advantage.

Cons:

1. Volatility: Mexican stocks can be more volatile than U.S. stocks, which can be a risk to investors. The Mexican stock market has had its share of ups and downs over the years, which can lead to significant losses if investors are not careful.

2. Liquidity: Another disadvantage of investing in Mexican stocks is the lack of liquidity. It can be difficult to find buyers for Mexican stocks, as the market is relatively small and illiquid.

3. Currency Risk: Mexican stocks are denominated in Mexican pesos, which can add an additional layer of risk to investors. If the peso weakens against the U.S. dollar, then investors may experience losses on their investments.

The historical return of Mexican stocks vs Mexican dividend stocks

The historical returns of Mexican stocks and Mexican dividend stocks have both been positive over long-term investment periods. The Mexican stock market, as represented by the IPC index, has seen an average annual return of 5.8% over the past 10 years. Over the same period, Mexican dividend stocks have seen an average annual return of 8.3%.

The performance of Mexican stocks has been driven by the strong economic growth of Mexico in recent years. The Mexican economy has grown at a rate of just over 2% per year since 2015, with an average growth rate of 1.5% over the past 10 years. This growth has been driven by increases in consumer spending, investments in infrastructure, and increasing foreign direct investment.

The higher returns of Mexican dividend stocks are due in part to the fact that companies in Mexico are more likely to pay dividends than other countries. In addition, Mexican dividend stocks tend to have higher dividend yields than other international markets. This is due to the fact that companies in Mexico generally have lower valuations than companies in other markets, making the dividend yields more attractive.

In addition, Mexican dividend stocks also benefit from a lower cost of capital. Mexico has a much lower cost of debt, which allows companies to pay out higher dividends. This has been a key driver of the higher returns of Mexican dividend stocks in recent years.

Overall, both Mexican stocks and Mexican dividend stocks have seen positive historical returns, with dividend stocks outperforming the broader market. In addition, Mexican dividend stocks have been a particularly attractive investment for investors seeking higher yields.

How often do Mexican companies pay a dividend?

The frequency at which Mexican companies pay a dividend varies from company to company. Generally, most companies pay dividends on a quarterly basis, with some offering semi-annual and annual payments. However, some companies, particularly those with a lower market capitalization or those with a greater focus on reinvesting profits, may choose to pay dividends less often or not at all.

In addition, some Mexican companies may also declare special dividends, which can be issued at any time. Special dividends are generally less frequent, but they can be a great way to reward shareholders with additional payments.

The timing of dividend payments is also subject to the discretion of the company’s Board of Directors. Companies may choose to delay or accelerate the payment of dividends if they deem it necessary, or they may decide to make dividend payments quarterly, semi-annually, or annually.

Ultimately, the frequency of dividend payments from Mexican companies will depend on the individual company’s business model and its financial position. It is important for investors to understand the dividend policies of the companies they are considering investing in and to monitor their dividend payments to get the best returns.

Mexican small–cap dividend stocks

Mexican small-cap dividend stocks can provide investors with an opportunity to diversify their portfolios and potentially increase returns. Small-cap stocks, which are generally companies with market capitalizations of less than $2 billion, can be attractive due to their potential for higher returns, but also come with greater risk. Dividend stocks provide a steady income stream and can act as a hedge against price volatility.

Investing in Mexican small-cap dividend stocks is a great way to diversify your portfolio and take advantage of the country’s strong economic fundamentals. Mexico has seen significant economic growth in recent years, with an expanding consumer base and rising wages. As a result, Mexican companies have become attractive investments for investors looking for growth opportunities.

One of the best ways to invest in Mexican small-cap dividend stocks is through exchange-traded funds (ETFs). ETFs are baskets of securities that track the performance of a particular market, sector, or asset class. There are a number of ETFs that specialize in Mexican small-cap dividend stocks, allowing investors to diversify their portfolios and access a wide range of companies.

Another option for investing in Mexican small-cap dividend stocks is to buy individual companies. Investing in individual stocks can be more risky, as there is no diversification, but it can be a great way to capitalize on outperforming companies. Investors should be sure to do their own research on the company they are interested in and consider factors such as the company’s financials, management, and competitive environment.

Mexican small-cap dividend stocks can provide investors with an opportunity to diversify their portfolios and potentially increase returns. With strong economic fundamentals and a growing consumer base, Mexico is an attractive investment destination for investors looking for growth opportunities. Investors should consider different options for investing in Mexican small-cap dividend stocks, including ETFs and individual stocks, and do their own research before making any investment decisions.

How to buy Mexican stocks?

Buying Mexican stocks is a great way to gain exposure to the Mexican economy and diversify your portfolio. Fortunately, it is fairly simple to buy Mexican stocks, even if you’re based in the United States or another country. Here is a step-by-step guide to help you get started.

1. Research Mexican stocks

Before investing in Mexican stocks, you should do your research. Consider the company’s financials, management team, growth potential, and other factors. You should also compare the stock to similar companies in the same industry.

You can find information about Mexican stocks on popular investing websites such as Yahoo Finance. You can also use sites like Google Finance and EDGAR to find financial reports for Mexican companies.

2. Open a brokerage account

Once you’ve identified the Mexican stocks you want to buy, you will need to open a brokerage account. This can be done online, and most brokerages offer accounts for both U.S. and international investors.

Make sure to research the fees and commissions associated with the account you choose. Some brokerages offer discounted rates for international investors.

We recommend Interactive Brokers (we use them ourselves).

3. Deposit funds in your account

Once you’ve opened an account, you will need to fund it. Most brokerages accept a variety of payment methods, including bank transfers, debit cards, and credit cards.

4. Place an order

Once your account is funded, you can place an order to buy Mexican stocks. You can choose to buy stocks in U.S. dollars or Mexican pesos. If you’re not sure which currency to use, you can use a currency converter to compare prices.

5. Monitor your investments

Once you’ve purchased your Mexican stocks, you should monitor them regularly. Pay attention to the company’s performance, news, and other developments that may affect the stock’s price.

You should also keep an eye on the Mexican economy. Changes in the currency, interest rates, and other policies can affect the performance of Mexican stocks.

These are the steps for buying Mexican stocks. By doing your research, choosing the right brokerage account, and monitoring your investments, you can become a successful investor in Mexican stocks.

What is the average payout ratio for Mexican dividend stocks?

The average payout ratio for Mexican dividend stocks is typically lower than other international markets. The average payout ratio among Mexican dividend stocks is approximately 30-40%, which is lower than the average payout ratio of 45-50% for international markets. This lower payout ratio is due to the fact that Mexican companies are generally more conservative in their dividend distributions and prefer to retain profits for future growth. Additionally, Mexico’s tax system is structured in such a way that there is an incentive for companies to retain profits to avoid paying higher taxes. Furthermore, Mexican companies also tend to be more focused on short-term performance, which can further reduce the amount of dividends distributed to shareholders.

While the average payout ratio for Mexican dividend stocks is typically lower than other international markets, it is important to note that it is possible to find higher yielding dividend stocks in Mexico. Some Mexican stocks have payout ratios of up to 80-90%, which is significantly higher than the average payout ratio for Mexican dividend stocks. Investors should do their research and carefully evaluate the dividend policies of Mexican companies in order to identify stocks with higher yield potential.

How big is the Mexican stock market?

The Mexican stock market, or Bolsa Mexicana de Valores (BMV), is the largest stock exchange in Latin America. It is the second largest stock exchange in the Americas, with a market capitalization of US$1.2 trillion as of April 2021.

The BMV was founded in 1894, making it one of the oldest stock exchanges in the Americas. It is one of the most liquid markets in the region and is home to over 200 listed companies. The market is divided into three main sectors: primary, secondary, and auxiliary. The primary sector consists of large-cap and blue-chip companies that are listed on the BMV’s principal exchange, while the secondary sector consists of smaller and mid-cap companies listed on the BMV’s secondary exchange. The auxiliary sector includes a variety of financial instruments and derivatives.

In terms of trading volume, the BMV is the fourth-largest in Latin America and the ninth-largest in the world. It has traditionally been dominated by domestic issuers and investors, but it has seen increasing foreign investment in recent years. It is also home to some of the most heavily traded stocks in the Latin America region, including America Movil, Femsa, and Grupo Mexico.

The BMV has recently seen an increase in the number of ETFs and ADRs listed on its exchanges, as well as a growing number of companies that are tapping into the capital markets to raise money for their operations. The exchange is also home to the Mexican derivatives market and a variety of other financial instruments.

Overall, the Mexican stock market is a major and influential player in Latin American finance, offering a wide range of companies and financial instruments for investors to choose from. Its size and liquidity make it an attractive destination for both domestic and foreign investors.

Are Mexican stocks shareholder friendly?

Mexican stocks can be a great way to invest in the Mexican economy, but it is important to consider their shareholder friendliness when making investment decisions. As with any stock, there are potential risks associated with investing in Mexican stocks and it is important to understand the company’s corporate governance policies, its financials and the potential risks before investing.

The Mexican stock market is regulated by the Mexican Stock Exchange and the National Banking and Securities Commission, which is the financial regulatory body in Mexico. Mexican companies are required to adhere to the Mexican Corporate Governance Code and must provide full disclosure of their financials and operations.

In general, Mexican stocks are shareholder friendly and provide strong shareholder rights protection. Companies listed on the Mexican Stock Exchange must comply with rigorous corporate governance standards, which includes providing clear and timely disclosure of information and ensuring fair and transparent financial reporting and corporate governance practices. Additionally, Mexican companies must provide shareholders with the right to attend and vote on shareholder meetings and also receive advance notice of any shareholder meetings.

Furthermore, Mexican companies are required to comply with strict insider trading laws, which helps ensure that investors are treated fairly. Mexican companies may also provide additional shareholder rights, such as the right to tender shares and the right to receive dividend payments.

Overall, Mexican stocks can be a great way to invest in the Mexican economy, and generally provide strong shareholder rights protection and transparency. Before investing, it is important to understand the company’s corporate governance policies, financials, and the potential risks associated with the company’s stock.