Login | September 10, 2025
ADRs, explained
THE MOTLEY FOOL
Ask the Fool
Published: September 9, 2025
Q: What are ADRs? -- B.N., Watertown, Massachusetts
A: American depositary receipts (ADRs) help American investors invest in foreign stocks. Without them, if you wanted to invest in a company whose stock was traded only on a foreign stock exchange, it could be a tricky (or impossible) undertaking. But many foreign companies -- such as BP (based in Britain), Novartis (Switzerland) and Toyota Motor (Japan) -- are listed on U.S. stock exchanges via ADRs.
An ADR is created when a bank buys shares of a foreign company outside the United States and issues a security representing shares of that company. Priced in U.S. dollars, these ADR shares trade just like regular U.S. stocks on American exchanges. Read up on ADRs if you're interested, as there's more to know, especially regarding fees and taxes.
Q: How many shareholders do companies typically have? -- K.L., Warren, Ohio
A: There's a wide range. Small businesses might have relatively few, but publicly traded companies often have tens or hundreds of thousands. Microsoft had 81,346 registered shareholders as of about a year ago, for example, while Caterpillar had 20,191 at the end of 2024.
Those numbers don't offer the full picture, though, because many people these days hold stocks "in street name" -- through their brokerage. While the shares are held in the brokerage's name, the account holders are the actual owners of the shares. A company may not even know how many different shareholders it has within a given brokerage's block of shares -- and the number changes over time, too.
As an example, Nestle recently noted that it has about 160,000 registered shareholders, but when you take into account indirect holders such as ADR holders and others, "the total number of shareholders probably exceeds 250,000."
Fool's School
Consider Dividend ETFs
Too many people chase high-flying growth stocks without realizing that steady and solid dividend-paying stocks can perform better over the long run. Consider this: A study by Ned Davis Research summarized by Hartford Funds found that between 1973 and 2024, companies that grew or initiated dividend payments delivered annualized returns of 10.2% versus 4.3% for non-dividend stocks and 7.65% for an equal-weight S&P 500 index. The dividend payers were less volatile than their counterparts, too.
A simple and effective way to invest in dividend-paying stocks is via dividend-focused exchange-traded funds (ETFs). ETFs are funds that trade like stocks, making it easy to buy or sell them within brokerage accounts. Here are a handful of dividend ETFs that you might want to look into:
-- SPDR Portfolio S&P 500 High Dividend ETF (SPYD): This ETF recently yielded 4.5% and delivered an average annual gain of 14.3% over the past five years (admittedly, a period with above-average gains for the stock market). It tracks the S&P 500 High Dividend Index of 80 high-yielding companies within the S&P 500 index.
-- Schwab U.S. Dividend Equity ETF (SCHD): This ETF recently yielded 4% and averaged an annual gain of 13.7% over the past five years. It tracks the Dow Jones U.S. Dividend 100 Index, which focuses on high-yielding U.S. stocks that are fundamentally strong and have paid dividends consistently.
-- Vanguard High Dividend Yield ETF (VYM): This ETF recently yielded 2.9% and averaged an annual gain of 14.7% over the past five years. It tracks the FTSE High Dividend Yield Index, which includes hundreds of stocks with above-average dividend yields.
-- Fidelity High Dividend ETF (FDVV): This ETF recently yielded 3% and had an average annual gain of 18.1% over the past five years. It mostly holds stocks from the Fidelity High Dividend Index, a portfolio of large- and mid-cap U.S. stocks that are expected to keep paying and increasing their dividends.
A little digging online will turn up additional promising dividend-focused ETFs.
My Smartest Investment
Collected Dividends
My smartest investment move was never selling. In the 1950s and 1960s, I received shares of IBM from my grandparents. They were paper certificates, so I parked them in my safe deposit box. I never sold any shares because they paid a handsome dividend. I moved around a bit and married twice, and the stock split multiple times.
In 2014, I got the investing bug and found the money to start investing on my own. There were so many great tech stocks that interested me. I opened a Schwab account, and my first purchase was 18 shares of Apple, for around $10,620. After a few stock splits and reinvested dividends, I now own 558 shares worth $112,475. They call that a 10-bagger -- 10 times the value of my original purchase.
In the last 11 years, I've bought into all of the Magnificent Seven stocks (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla). My portfolio of 35 total stocks, including IBM, has grown from $100,000 in value to over $775,000. Dumb luck. -- G.P., via email
The Fool responds: That doesn't look like dumb luck to us! You invested in lots of great businesses and, most important, you hung on through ups and downs. Better still, you reinvested the dollars you received as dividends in more shares of stock.
(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)
Foolish Trivia
Name That Company
I trace my roots back to 1923, when my founder inked a deal to make and distribute short comedies featuring animation. By 1927, I was focused just on animation, introducing a popular rodent in 1928. In 1937, my first feature-length animated film, "Snow White and the Seven Dwarfs," debuted. I began in the back of a real estate office but now own tens of thousands of acres of land. Today, with a recent market value near $220 billion, I'm an entertainment titan, owning theme parks and resorts, movie studios and familiar names such as Hulu, ESPN and ABC. Who am I?
Last Week's Trivia Answer
I trace my roots back to 1960, when two brothers bought a pizza joint in Ypsilanti, Michigan. One soon bought out the other, and within a few years he was franchising me. By 1989, I boasted 5,000 locations worldwide. I added breadsticks in 1992, sandwiches in 2008 and penne pasta in 2009. With a recent market value topping $15 billion, I'm the world's largest company delivering a certain item. Bain Capital bought most of me in 1998 and took me public in 2004. I've franchised more than 21,000 stores around the world, and I rake in more than $19 billion annually. Who am I? (Answer: Domino's Pizza)
The Motley Fool Take
Undervalued and Growing
Bristol Myers Squibb (NYSE: BMY) has been pummeled in 2025, creating a rare buying opportunity for investors willing to look past short-term headwinds. The company recently traded at a low forward-looking price-to-earnings (P/E) ratio of 7 -- versus about 23 for the S&P 500. This suggests investors have a pessimistic view of the company.
BMS' dividend recently yielded a fat 5.4%. While the payout ratio of 91% (the percentage of earnings being paid out in dividends) is steep, the pharma titan has successfully navigated similar pressures before.
To be fair, the company does face challenges. Wall Street expects 2026 revenue to decline by nearly 7%, driven by mounting pricing pressures, geopolitical upheaval and slowing growth in key franchises. Longer term, the company also faces significant patent expirations for some of its blockbuster drugs. Meanwhile, the company was recently stung by a string of clinical trial failures. While management insists these failures don't affect core growth opportunities for those drugs, the market remains skeptical.
But Bristol Myers Squibb's aggressive acquisition strategy has built a diversified pipeline extending well beyond its existing blockbusters. The company is making progress paying down debt from prior deals, improving financial flexibility so it can make more value-creating acquisitions. Consider taking a closer look.
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