The 2025 Ex-US Investment Opportunity Set, Bullish Dividend Stocks, And Popular High-Stakes ETFs
Birgul COTELLI, Ph. D.
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As 2025 progresses, investors are evaluating a shifting global market influenced by economic changes, geopolitical developments, and evolving monetary policies.
With opportunities beyond the U.S. gaining traction, experts are identifying key trends shaping international investments.
Top Wall Street analysts remain bullish on select dividend stocks, emphasizing their stability and income potential in an uncertain environment.
Meanwhile, leveraged and inverse, high-stakes ETFs designed for bold market moves are attracting increased investor interest.
The investment opportunities of 2025 are defined by a mix of traditional income-generating assets, innovative financial instruments, and global market shifts. Investors must remain vigilant, balancing risk and reward while adapting to changing economic conditions, geopolitical developments, and monetary policies.
Disclaimer: the Newsletter Investors Board is not an investment advice. The sole purpose of its publication is informative.
The 2025 Ex-US Investment Opportunity Set And Market Trends
As the US stock market had reached record valuations a couple of months ago, investors were increasingly looking beyond American borders to diversify their portfolios. With artificial intelligence (AI) fueling tech sector gains and robust earnings projections sustaining US market momentum, geopolitical risks and potential trade policies under the new administration introduce fresh uncertainties. This dynamic has led investors to explore opportunities in North America, Latin America, Asia, and Europe for potential growth and diversification.
Franklin Templeton 's report proves it adequate to consider investment markets outside US given recent trade war developments.
North America: Canada & Mexico
Canada: A Market of Stability and Value
Canada remains a key investment destination, offering strong financial and energy sector performance. Despite global market volatility, the Canadian market is considered undervalued, particularly in commodities, banking, and infrastructure. The country's economic stability, robust regulatory framework, and attractive dividend yields make it an appealing choice for investors seeking balanced returns.
Mexico: Opportunities and Risks
Mexico's stock market has faced headwinds due to policy concerns, currency depreciation, and potential tax risks on remittances. However, its proximity to the US and strong manufacturing sector make it a compelling opportunity. The "nearshoring" trend, where companies relocate production closer to the US, has boosted Mexico's industrial sector. Nevertheless, potential trade policy changes, such as new tariffs or adjustments to the US-Mexico-Canada Agreement (USMCA), could impact investment sentiment.
Latin America: Brazil’s Growth Potential
Brazil presents one of the most attractive investment cases in Latin America. Its market is undervalued relative to global peers, with low unemployment, rising consumer demand, and a growing middle class. Unlike economies with high export dependencies, Brazil is less vulnerable to global trade tensions due to its low trade-to-GDP ratio. Additionally, as the host of the 2025 G20 Summit ( G20 South Africa ), Brazil’s increasing geopolitical influence may bolster investor confidence. Key sectors of interest include energy, technology, and consumer goods.
Asia: China, India, Taiwan, Japan, and South Korea
China: Navigating Uncertainty
China remains a critical global market despite trade tensions and regulatory challenges. The government's emphasis on domestic consumption, financial sector reforms, and infrastructure investments provide long-term opportunities. Investors should focus on sectors like electric vehicles (EVs), renewable energy, and technology while remaining cautious of geopolitical risks.
India: A Rising Economic Power
India continues to be a major growth engine, benefiting from a young population, foreign investment inflows, and "China+1" diversification strategies. The Indian stock market has attracted global attention due to its thriving technology, financial, and consumer sectors. Government reforms aimed at boosting manufacturing and infrastructure further enhance India's long-term investment potential.
Taiwan: The Semiconductor Powerhouse
Taiwan plays a pivotal role in the AI and semiconductor revolution. The island’s chip manufacturing dominance, led by companies like TSMC, makes it a critical player in the global supply chain. With increasing demand for AI-driven technologies, Taiwan’s equity markets remain attractive for investors seeking exposure to the tech sector.
Japan: Resurgence in Corporate Governance
Japan’s stock market has experienced a resurgence, fueled by corporate reforms, strong wage growth, and increased stock buybacks. The country’s commitment to improving shareholder returns has drawn renewed interest from global investors. Additionally, Japan’s manufacturing and automation sectors continue to thrive amid technological advancements.
South Korea: An Undervalued Market
South Korea remains undervalued despite its strong technological and industrial capabilities. The country's leading position in semiconductors and electronics, coupled with increasing shareholder-friendly policies, provides opportunities for long-term growth. However, geopolitical tensions with North Korea and regional uncertainties require careful consideration.
Europe & the UK: A Market Ripe for Reassessment
European markets have been overshadowed by concerns over slow economic growth and political instability. However, undervalued equities and strong corporate earnings present attractive opportunities. The European Central Bank’s monetary policies and potential fiscal stimulus could further support equity markets. Meanwhile, the UK market, post-Brexit, has shown resilience, particularly in the financial and consumer sectors. Investors should watch for developments in trade policies and interest rate movements that could shape market trajectories.
Conclusion: A Diversified Global Investment Strategy
While the US market continues to dominate headlines, international markets offer diverse investment opportunities in 2025. From Canada’s stability and Mexico’s manufacturing potential to Brazil’s growth, India’s economic rise, and Taiwan’s semiconductor dominance, investors have numerous avenues for diversification. Navigating geopolitical risks, trade policies, and local economic trends will be crucial in identifying the best opportunities across global markets.
Top Wall Street Analysts Are Bullish On These Dividend Stocks
Dividend stocks provide investors with a reliable income stream while enhancing overall portfolio returns. However, selecting the right dividend stocks can be challenging given the vast number of publicly traded companies. Investors often turn to Wall Street analysts, who identify stocks with strong financials that support consistent dividend payments.
Here are three dividend-paying stocks that top analysts on TipRanks recommend for 2025:
McDonald’s (MCD)
Fast-food giant McDonald's (NYSE: MCD) recently reported its fourth-quarter earnings, which aligned with market expectations. However, revenue fell short due to lower U.S. restaurant sales, affected by an E. coli outbreak in late October. Despite this, MCD stock climbed on earnings day, driven by strong international sales and expectations of improved performance in 2025, supported by strategic initiatives.
McDonald’s recently declared a cash dividend of $1.77 per share, payable on March 17. With an annualized dividend of $7.08 per share, MCD stock offers a dividend yield of 2.3%. The company is a dividend aristocrat, having increased its dividends for 48 consecutive quarters.
Following the Q4 results, Jefferies analyst Andy Barish reiterated a buy rating on MCD stock and raised his price target to $349 from $345. Barish expects McDonald’s to benefit from improved traffic trends and the launch of the McValue menu, alongside digital sales, drive-thru, and core menu enhancements. He projects U.S. same-store sales growth of 2.3% in 2025 and 2.6% in 2026.
Barish, ranked No. 566 among over 9,300 analysts tracked by TipRanks, has a 57% success rate with an average return of 10.4% per rating.
Ares Capital (ARCC)
Ares Capital (Nasdaq: ARCC), a business development company providing financing solutions to middle-market businesses, recently posted mixed Q4 2024 results. The company declared a dividend of $0.48 per share for Q1 2025, payable on March 31, with a dividend yield of 8.2%.
RBC Capital Markets analyst Kenneth Lee reaffirmed his buy rating on ARCC stock and increased the price target to $24 from $23. While the company’s core earnings per share (EPS) of $0.55 fell slightly short of RBC’s forecast of $0.58, its portfolio activity exceeded expectations, and credit performance remained solid despite economic uncertainties.
Lee adjusted his EPS estimates for 2025 to $2.10 from $2.13 and for 2026 to $2.14 from $2.16, factoring in lower asset yields and reduced debt costs. He remains bullish on ARCC, citing its strong risk management, stable dividend payouts, and scale advantages.
Lee ranks No. 15 among TipRanks analysts, boasting a 74% success rate with an average return of 19.1% per rating.
Energy Transfer (ET)
Midstream energy company Energy Transfer (NYSE: ET) manages an extensive pipeline and energy infrastructure network across 44 U.S. states. Despite missing Q4 earnings and adjusted EBITDA expectations, the company plans to invest $5 billion in growth projects this year to meet rising energy demands, particularly from data centers.
Energy Transfer declared a quarterly dividend of $0.3250 per common unit for Q4 2024, reflecting a 3.2% year-over-year increase. The stock offers a yield of 6.7%.
Mizuho analyst Gabriel Moreen reiterated his buy rating on ET stock with a price target of $24. While the company’s 2025 guidance fell short of expectations, Moreen emphasized that the significant capex investments in areas like the Hugh Brinson Pipeline, natural gas liquids (NGL) export, and storage development could drive long-term earnings growth beyond 2026.
Moreen, ranked No. 62 on TipRanks, has a 78% success rate and an average return of 16.4% per rating.
Conclusion
McDonald’s, Ares Capital, and Energy Transfer present compelling dividend investment opportunities for 2025. While McDonald’s benefits from global expansion and digital sales growth, Ares Capital offers high-yield dividends backed by robust financials. Meanwhile, Energy Transfer’s aggressive capital investments could lead to substantial long-term earnings growth. Investors seeking stable income and growth potential may find these dividend stocks attractive in the coming year.
High-Stakes ETFs: The Growing Popularity Of Leveraged Market Bets
In recent months, trading volumes have revealed a striking trend: a growing number of investors are making outsized bets on the stock market. While many are bullish, some are also placing short positions. A major factor behind this trend is the increasing popularity of leveraged and inverse exchange-traded funds (ETFs).
These ETFs cater to investors looking for short-term amplified market exposure. Leveraged ETFs use financial derivatives to magnify the daily returns of an index or stock. For instance, if an index gains 1% in a day, a 2x leveraged ETF would rise 2%, while a 3x leveraged ETF would gain 3%. Conversely, inverse ETFs aim to deliver the opposite of the index’s daily performance. A 2x inverse ETF would fall 2% when the index rises by 1% and gain 2% when the index declines by 1%.
The Growing Popularity of Leveraged and Inverse ETFs
These products are not only growing in terms of assets but are also playing an increasingly significant role in the daily trading volume of the ETF universe. Douglas Yones ChFC?, CETF?, CEO of Direxion, one of the largest providers of leveraged and inverse ETFs, explains:
“We’re continuing to see more investors lean into leveraged ETFs as a way to express short-term views on the market. Given all the volatility and daily market-moving headlines, it’s not surprising we are seeing higher volume and more assets entering the space.”
The first leveraged and inverse ETFs launched in the U.S. in 2006, allowing long or short bets on major indexes like the S&P 500 and Nasdaq 100. In 2022, leveraged single-stock ETFs debuted, providing amplified exposure to individual stocks such as NVIDIA and Tesla.
Largest Leveraged and Inverse ETFs by Assets Under Management (AUM)
Why Are These Products Growing?
Experts attribute the surge in leveraged and inverse ETFs to the rise of speculative trading, particularly among younger investors. Todd Sohn, head of ETFs at Strategas Securities, believes this is driven by accessibility and the allure of amplified gains:
“I think there is major appetite among younger traders wanting to play with leverage due to the gains it can provide. The barriers to entry are extremely low; you can buy these products on your phone.”
Approximately 75% of these ETFs’ ownership is from retail investors, with the remaining 25% consisting of hedge funds, brokerage firms, and institutional traders. Additionally, a growing number of investors from outside the U.S., particularly from South Korea, Japan, and Europe, are engaging in leveraged ETF trading.
Increasing Share of Trading Volume
Leveraged and inverse ETFs are among the most heavily traded ETFs on a daily basis. A look at the average three-month daily dollar volume reveals their significance:
Leveraged and inverse ETFs now represent nearly 8% of total ETF assets under management (AUM), up from just 2% in 2016, highlighting their increasing presence in the market.
The Risks of Leveraged ETFs
While leveraged ETFs offer the potential for high returns, they come with significant risks. One major concern is the daily reset mechanism, which can lead to unexpected long-term performance due to compounding effects.
For example, suppose an index gains 10% on one day and loses 10% the next:
Standard Index Performance:
2x Leveraged ETF Performance:
Instead of the expected $98, the leveraged ETF falls to $96 due to compounding effects. These products are designed for short-term trading and can be risky if held for extended periods.
Final Thoughts
Leveraged and inverse ETFs are becoming a dominant force in the market, providing retail and institutional investors with tools to capitalize on short-term market movements. However, their complexity and inherent risks mean they are not suitable for buy-and-hold investors. As speculative trading continues to rise, these ETFs will likely remain a significant part of daily market activity, but investors should proceed with caution, fully understanding the risks involved.
Balancing Stability, Growth, and Bold Market Moves
As investors adapt to an evolving global market in 2025, diversification and strategic positioning are key.
While the U.S. stock market remains a dominant force, international markets present compelling opportunities. Canada’s stability, Mexico’s manufacturing boom, and Brazil’s economic expansion offer attractive entry points for investors. Meanwhile, Asia’s tech-driven growth—led by India, Taiwan, and Japan—continues to draw global capital, and undervalued European equities provide long-term potential.
Dividend stocks remain a strong pillar of stability in uncertain times, with companies like McDonald’s, Ares Capital, and Energy Transfer offering reliable income streams and growth potential.
At the same time, leveraged and inverse ETFs are gaining traction among traders seeking short-term amplified market exposure. While these high-risk instruments offer opportunities for quick gains, they require careful risk management due to their compounding effects and volatility.
Ultimately, the investment opportunities of 2025 are defined by a mix of traditional income-generating assets, innovative financial instruments, and global market shifts. Investors must remain vigilant, balancing risk and reward while adapting to changing economic conditions, geopolitical developments, and monetary policies.
Disclaimer: the Newsletter Investors Board is not an investment advice. The sole purpose of its publication is informative.
Sources: Franklintempleton.ch Cnbc.com
G20 South Africa TSMC McDonald's TipRanks Jefferies Ares Capital RBC Capital Markets Nasdaq Energy Transfer Mizuho Direxion Tesla NVIDIA Franklin Templeton CNBC Strategas Securities NYSE
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