We recently compiled a list of the 12 Best International Dividend Stocks To Buy Now. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against the other international dividend stocks.

Dividend stocks have been grabbing investors' attention for a while now. According to JP Morgan, over the last two decades, global dividends per share have increased at an annual rate of 5.6%, but analysts expect this to rise to 7.6% in the future, driven by historically low payout ratios. During the 2020 pandemic, many companies cut dividends, but as earnings have recovered, especially in Big Tech and AI, dividends have not kept up. With payout ratios at 25-year lows, simply returning to normal could add 2% annual growth over the next five years.

After slowing down post-COVID, global dividend growth made a surprising comeback last year, increasing 8% and adding an extra $180 billion in payouts despite ongoing economic and geopolitical challenges. According to S&P Global, this was largely driven by record dividend initiations in US tech, European banks, Japan’s auto industry, and solid growth from China. Even oil and gas companies held strong despite market volatility. Looking ahead, experts predict global dividends will hold steady at $2.3 trillion in 2025.

Regionally, developed Asia, which includes Japan, Hong Kong, Australia, South Korea, and Singapore, is looking at a 3% rise in dividends this year. Europe, on the other hand, is expected to see a 3.4% decline. In emerging markets, the trends are mixed. Asia, led by China, India, and Taiwan, is on track for a 5% increase, while dividends in the Middle East and Africa could drop by 20%, mainly because Saudi Aramco’s special dividend program ended. Latin America is also expected to see a small dip of around 4%.

When it comes to sectors, banks and energy companies remain the biggest dividend payers. Banks are expected to distribute around $380 billion globally, but after four years of rapid 20% growth, they are now down to just 2%. Banks are playing it safe, waiting to see how interest rates move.

Our Methodology

For this article, we used the BlackRock International Dividend ETF to filter out dividend stocks listed on US exchanges but headquartered internationally. We focused on picking stocks that were most popular among hedge funds. The list below is ranked in the ascending order of Q3 2024 hedge fund sentiment, and dividend yields are mentioned as of February 11.

At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)

A close-up of a complex network of integrated circuits used in logic semiconductors.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Dividend Yield as of February 11: 1.34%

Number of Hedge Fund Holders: 158

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), the world's largest chip manufacturer, ranks first on our list of the best dividend stocks. Experts warn that Trump’s plan to impose a 100% tariff on Taiwanese semiconductors could backfire, as Taiwan dominates advanced chip production. Companies like Taiwan Semiconductor Manufacturing (NYSE:TSM) have strong pricing power and would likely pass the extra costs onto US businesses and consumers, potentially fueling inflation. Analysts also argue that instead of bringing chip manufacturing to the US, the move could push Taiwanese firms to set up factories elsewhere, triggering a global trade war and straining US-Taiwan relations.

In the fourth quarter of 2024, Taiwan Semiconductor Manufacturing (NYSE:TSM) saw a 14.3% year-over-year rise in consolidated revenue, reaching NT$868.46 billion, with diluted earnings per share at NT$14.45. Since initiating cash dividends in 2004, TSM has maintained a steady payout without any reductions. In 2024, the company distributed $11.3 billion in dividends. The company last paid a $0.6165 per share quarterly dividend on January 9, 2025.

In the third quarter of 2024, 158 hedge funds tracked by Insider Monkey were bullish on Taiwan Semiconductor Manufacturing (NYSE:TSM), up from 156 funds in the last quarter.

Overall TSM ranks 1st on our list of the best international dividend stocks to buy. While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.

Disclosure: None. This article is originally published at Insider Monkey.