The depreciation of the Brazilian real against the US dollar has made dollarizing one’s wealth more important than ever. Whether you are a trader or a long-term investor, having exposure to dollar-denominated assets is a valuable strategy for protecting and even increasing your purchasing power over time. In this article, you will understand not only how to operate currency exchange, but also how to build a dollarized portfolio that can pay you dividends in dollars.
Why Dollarize Your Wealth?
The Brazilian currency has experienced recurring devaluations, not only against the dollar but also compared to other emerging market currencies. Dollarizing means converting part of your reais into dollars, reducing exposure to fiscal, economic, and political risks in Brazil. In addition, the dollar generally has lower inflation than the real, preserving the value of your money more effectively over time.
However, merely holding dollars is not enough. It is important to make your money work in dollars by investing in assets that can generate income, such as stocks or ETFs traded abroad. In this way, you benefit not only from currency protection but also from the potential appreciation and dividend payments in a strong currency.
Dividends in Dollars: Dividend Kings and Aristocrats
If your goal is to receive passive income in dollars, knowing about the Dividend Kings and Dividend Aristocrats is an excellent starting point. These categories include American companies that have been increasing dividend payments for long periods:
- Dividend Kings: Companies that have increased dividend payments for more than 50 consecutive years.
- Dividend Aristocrats: Companies that have increased dividend payments for more than 25 consecutive years.
By focusing on these companies, you reduce the risk of investing in questionable quality businesses, since these well-established organizations have historically maintained and expanded their profit distribution to shareholders.
How to Trade and Invest Abroad
To dollarize your portfolio, you will need to open an account with a foreign broker and convert part of your reais into dollars. This involves:
- Choosing an International Broker: There are several options, each with different costs and features. Research and choose the one that best meets your needs.
- Sending Money Abroad: Use international remittance services to convert reais into dollars and deposit them into your foreign account.
- Buying Dollar-Denominated Assets: With dollars in your account, you can purchase shares of American companies, ETFs that track global indexes, or even assets focused on dividends.
Investment Strategy: Focusing on Resilient Companies
The idea is to choose well-established companies with a history of increasing dividend payments and to take advantage of price drops to make contributions. For example, if a Dividend Aristocrat undergoes a correction, instead of entering when the stock is at an all-time high, you wait for a significant decline. Thus, you buy at a lower price and hold the asset to receive recurring dividends in dollars.
An intelligent approach is to wait for chart formations signaling the end of the decline, such as a reversal pivot above the 20-period moving average. In this case, you combine technical analysis (to find a more opportune entry) with fundamental analysis (selecting companies with a track record of rising dividends).
Diversification and Market Timing
Dollarizing your wealth is not limited to buying American stocks. You can also trade Forex, invest in commodities, or even access cryptocurrencies that operate 24/7, allowing you to adjust positions even on weekends.
If you are already an investor in Brazil, you don’t need to abandon the local market. Simply add international exposure to reduce country-specific risks. By receiving dividends in dollars, you can even convert some back to reais to pay your bills in Brazil, or keep the money in dollars for other global investments.
Conclusion
Dollarizing your wealth goes beyond protecting yourself from the depreciation of the real. It’s also a way to access more stable markets, companies with a long history of generating value, and the possibility of receiving dividends in a strong currency. With the right strategy, you can profit both in an uptrend (asset appreciation) and in a downtrend (buying more shares and receiving dividends), thus building a more resilient portfolio.
Don’t miss the opportunity to learn more about international operations. Check out my free Forex course and deepen your knowledge in the world’s largest market. The link is below.
Good trades and see you in the next article!
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