Although the Australian economy has faced numerous challenges this year, the good news is that better times appear to be ahead, with a rebound in gross domestic product (GDP) growth projected by most economists.

Of course, that still means we have to get through the final quarter of a year in which growth has decelerated sharply, to a projected 2.4 percent from the commodity-driven five-year high of 3.7 percent last year.

While the Reserve Bank of Australia (RBA) sees the economy growing at a pace next year that’s consistent with the country’s long-term trend of 3 percent, both the International Monetary Fund (IMF) and institutional economists predict a more moderate acceleration, with forecasts of 2.8 percent and 2.7 percent, respectively. Unlike the RBA, private-sector economists don’t forecast the economy to rebound to 3 percent annual growth until 2015.

In the meantime, the RBA remains on an easing cycle that began in late 2011. Though the central bank’s short-term cash rate is at an all-time low, economists, such as Westpac Banking Corp’s (ASX: WBC, NYSE: WBK) Bill Evans, expect further rate cuts early next year. The RBA held the rate at 2.5 percent at its most recent meeting earlier this month, with some central bank watchers speculating about whether the board is worried about the country’s rising real estate market.

Australia’s housing market suffered a modest trough relative to many of its developed-world peers, so prices haven’t had to climb as much to overtake old highs. In fact, housing prices in some metropolitan areas have already set new all-time highs. And historically low rates are starting to spur the purchase of real estate for investment purposes.

Still, the increase in home prices over the past year is well short of the sort of double-digit increases that the US housing market experienced during its bubble years. And given the fact that rates are likely to remain at historic lows for at least another year or two, the real estate sector certainly seems like the most likely candidate to lead the economy higher as investment in the resource sector wanes.

At the same time, Australia’s economic fortune is closely aligned with China, its largest trading partner. While China’s economic growth would be the envy of most countries in the developed world, its growth in GDP is clearly decelerating. In fact, Bloomberg’s survey of private-sector economists shows China’s growth declining from 7.6 percent in 2013 to 7.2 percent by 2015. That’s still heady growth, though it’s considerably lower than the economy’s 9.6 percent average annual growth over the past 10 years.

But even when China’s economy was growing more rapidly and gobbling up commodities from resource-rich trading partners, Australia still generally posted persistent trade deficits. In fact, the country’s long-term tendency toward current account deficits is the reason why the RBA’s short-term rate is significantly higher than that of many other first-world central banks, even though it’s currently at an all-time low. These higher rates help attract inflows of foreign capital. Over the past 10 years, for example, Australia’s trade balance has averaged a deficit of AUD1.1 billion.

Fortunately, Australia’s exports should get a boost from a depreciating currency. The Australian dollar’s relative strength compared to other currencies has been a major headwind for the country’s exporters. And engineering a decline in the currency has been a major goal of the RBA’s monetary policy.

Interestingly, it took the US Federal Reserve to finally undo the aussie’s unusual strength. The currency had traded above parity with the dollar for much of 2011-12, but began its decline in earnest earlier this year when Fed Chief Ben Bernanke revealed that the central bank was considering when to curtail its extraordinary stimulus.

The aussie fell as low as USD0.89, though it’s rebounded over the past six weeks, thanks in part to the Fed’s decision to continue easing for now. The Aussie currently trades near USD0.95, down about 10.4 percent from its year-to-date high in early January. A Bloomberg survey of institutional economists shows the currency is projected to drop by a penny per year to a low of USD0.86 by 2017.

A weakening aussie should help the country’s exports compete more effectively in the global market, while reducing domestic demand for imports. The latter effect should also help prop up demand for the country’s own manufacturers, as imports become more expensive.

Although Australia’s economy has all the factors in place to shake off its malaise, we could still see some troubling data in the months ahead. For instance, the latest employment data from the Australian Bureau of Statistics show that the economy added just 9,100 jobs in September, well shy of economists’ consensus forecast of 15,000 new jobs.

And while the unemployment rate dropped two-tenths of a percentage point, to 5.6 percent, that was largely due to a declining labor force participation rate, which fell by a tenth of a point to 64.9 percent, the lowest level since late 2006. The participation rate is on a worrisome trend, as it’s now fallen for the third consecutive month, as discouraged job seekers simply stop looking for work. According to Westpac, total employment is up just 0.8 percent year to date, which underscores the extent to which this is a difficult job market.

The mix of new jobs created wasn’t especially encouraging either. Gains in full-time employment accounted for 5,000 new jobs, while part-time employment added 4,100 new jobs. Over the past three years, the economy has added an average of 6,500 full-time jobs each month and 4,900 part-time jobs per month.

On a year-to-date basis, however, the problems with the job market appear much starker. The economy has actually lost an average of 600 full-time jobs per month so far this year, while adding an average of 8,400 part-time jobs each month. Lower-quality part-time jobs are hardly the sign of a healthy employment market.

Another vexing indicator is the decline in total hours worked. In past reports, this figure suggested that though employers were reluctant to hire, the demand for greater productivity was still there, as companies were simply wringing more hours from their existing workforce.

Indeed, the total number of hours worked had grown 2 percent year to date through August, according to Westpac, but the September number fell by four-tenths of a percentage point month over month. That decline was of sufficient magnitude to drop the year-to-date growth in total hours worked to just 0.6 percent.

In the short term, these data are certainly concerning. But Australia has historically low rates combined with a weakening currency and a newly elected government that’s more favorably disposed toward business than its predecessor. That augurs well for next year.

Dividend Watch List

When David Jones Ltd (ASX: DJS, ADR: DJNSY) reported results for its fiscal 2013 (ended July 31, 2013) on Sept. 24 management, looking ahead, noted that trading conditions would remain challenging over next 12 months, specifying subdued consumer sentiment as well as ongoing competitive pressure.

It’s the latter factor that seems a more compelling cause of management’s concerns, as electronics- and grocery-focused retailers are actually encouraged by the positive impact on Australians’ attitudes about spending of the Reserve Bank of Australia’s long series of rate cuts that have taken its benchmark to an all-time low 2.5 percent.

Leading indicators for discretionary spending have actually improved recently. But one of Australia’s iconic department stores is under intense competitive pressure from specialty and high-end entrants to the market, existing players fighting similar battles and the continuing growth of online shopping.

David Jones will feel a lot of pressure on profit in fiscal 2014 due to the expiration of a profit guarantee agreement with American Express that will cut Financial Services earnings before interest and taxation (EBIT) roughly in half from fiscal 2013 levels to approximately AUD25 million.

At the same time, higher operating costs will eat into department store earnings, with costs of doing business tracking toward a 3.5 percent rise during the current fiscal year, to approximately AUD21 million.

David Jones is currently focused on private-label sales and improved category mix to boost the quality of its sales instead of sales growth, meaning it will likely lose market share in the near term and post another year of negative like-for-like sales growth.

The earnings gap left by the Financial Services EBIT decline unlikely to made up for by department store sales, the potential for higher costs of doing business and a payout ratio for the trailing 12 months of 95.1 percent, with management focused on a ratio closer to 85 percent of net profit after tax, is a recipe for a reduced interim dividend for fiscal 2014.

David Jones maintained its final dividend rate at AUD0.07. It had already reduced its fiscal 2013 interim dividend from AUD0.105 to AUD0.10.

The company cut its final dividend for fiscal 2012 to AUD0.07 per share from AUD0.15 paid for fiscal 2011. Hold.

Fiscal 2013 reporting season has wrapped up Down Under, with a slew of dividend reductions, concentrated in the Basic Materials group.

Basically the entire Basic Materials section of the How They Rate coverage universe can now be considered on the List, in one sense because all those companies are exposed to volatile resource prices, in another, more concrete way because most announced lower dividends this period than they did for the last one, one of the criteria that will get you a place on the List.

The Watch List is rather lengthy, a reflection of longstanding dividend practice for Corporate Australia, which as a general rule is not bound by strict dividend rates but rather by payout ratio ranges when it comes to “capital management” policy.

We have, however, removed companies that have omitted dividends for more than two consecutive cycles; for these companies dividend policy can be considered “discontinued.”

Australian companies customarily maintain policies of paying out a specified percentage based on particular earnings metrics, whether that metric is statutory net profit after tax (NPAT), underlying NPAT or operating cash flow.

Practically speaking, dividend rates will often vary more than they do for Canadian or US companies, which are almost universally pledged to maintaining dividend rates, often at the cost of tapping balance sheets in the absence of sufficient cash flow to cover obligations to shareholders.

This latter is fine in the short term, and it can be manageable in the longer term as well. But Australian firms are traditionally more debt-averse than their North American counterparts.

It’s important to note, too, that the CE Dividend Watch List is based on the monthly distribution scheme established during the income trust era, which, to the benefit of investors everywhere, persists even after the forced conversion to traditional corporations for many of these stocks.

Australia’s twice-yearly rhythm varies as well from the quarterly dividend arrangement to which most US companies adhere.

With recent dividend reductions and/or changes to guidance or policies that suggest non-regular payment the following companies have declared their worthiness for inclusion on the Dividend Watch List.

Basic Materials

Aditya Birla Minerals Ltd (ASX: ABY, OTC: ABWAF) reported a 1 percent rise in fiscal 2013 revenue to AUD502.3 million, but management reported a net loss of AUD8.3 million and didn’t declare a final dividend.

Company policy is “to seek to maximise cash returns to Shareholders whilst having regard to ensuring a sound financial structure for the Company and providing for value accretive development and exploration activities and targeted growth opportunities.”

Because there’s no clarity on the payment interval this stock will probably be an emeritus member of the Dividend Watch List.

Without a consistent dividend payment to compensate speculation of a return to more normal economic growth and a corresponding rebound in copper prices, Aditya Birla is a hold.

Arrium Ltd (ASX: ARI, OTC: ARRMF, ADR: OSTLY) declared a final dividend of AUD0.03, in line with the prior corresponding period, as it reported a fiscal 2013 statutory net loss of AUD695 million due to AUD961 million in impairment and restructuring charges.

Underlying net profit was in line with guidance at AUD168 million, and management offered upbeat fiscal 2014 guidance. Hold.

Ausdrill Ltd (ASX: ASL, OTC: AUSDF) declared a dividend of AUD0.055, down from AUD0.08 a year ago.

The company reported a 6.6 percent increase in fiscal 2013 sales revenue to AUD1.129 billion, though NPAT declined by 19.4 percent to AUD90.4 million and earnings per share were down 20.5 percent to AUD0.2963.

Normalized NPAT was AUD101.1 million. EBITDA was AUD288.5 million, while EBITDA margin was 22.6 percent, a slight improvement over the first half of fiscal 2013.

Operating cash flow was strong at AUD187.3 million, on an improvement in working capital versus the first half, when operating cash flow was AUD53 million. Ausdrill remains a buy under USD2.

Grange Resources Ltd (ASX: GRR, OTC: GRRLF) held its 2013 interim dividend steady at AUD0.01 per share. First-half iron ore product sales declined by 37.7 percent, however, and average realized prices were off by 11.4 percent.

Revenue was down 44.8 percent to AUD106.9 million, as NPAT slid 95.4 percent to AUD2.5 million. Hold.

Kingsgate Consolidated Ltd (ASX: KCN, OTC: KSKGF) omitted its final dividend after cutting its interim dividend by 50 percent to AUD0.05 per share.

Management reported a fiscal 2013 net loss after tax of AUD324 million due to AUD336 million of impairments and writedowns. Kingsgate’s realized gold price declined 4.5 percent to USD1,588 per ounce, as sales volume was off 4 percent to 195,948 ounces. Hold.

Medusa Mining Ltd (ASX: MML, OTC: MDSMF) omitted its final dividend, although fiscal 2013 revenue was up 28 percent to USD100.7 million and NPAT was up 2 percent to USD50.2 million. Medusa received USD1,610 per ounce for its sales volume of 77,488 ounces of gold versus USD1,658 per and 55,446 ounces sold in fiscal 2012.

Medusa didn’t pay an interim dividend despite the fact that fiscal 2013 first-half revenue was up 28 percent, EBITDA was up 24 percent and NPAT grew by 19 percent.

Management is clearly shepherding cash to its key Co-o gold mine development. Medusa Mining is a buy under USD2.

Mount Gibson Iron Ltd (ASX: MGX, OTC: MTGRF) maintained its fiscal 2013 final dividend at AUD0.02 per share.

Fiscal 2013 sales revenue were up 32 percent to AUD852.9 million, though net income dipped to AUD157.3 million from AUD162 million a year ago. Metric tons sold were up 69.2 percent. Mount Gibson, which had AUD376 million in cash as of June 30, 2013, is a buy under USD0.50.

Oz Minerals Ltd (ASX: OZL, OTC: OZMLF, ADR: OZMLY) declared an interim dividend for fiscal 2013 of AUD0.10, in line with the prior corresponding period.

But that was small comfort in the light of an underlying loss of AUD36.1 million for the first half. Net loss after tax was AUD268 million, driven by writedowns of AUD231.9 million at Prominent Hill.

Oz Minerals’ cash pile has dwindled to about AUD550 million from nearly AUD1 billion, but management was relatively upbeat, noting that the worst of the metals slump is over. Buy under USD4.50.

Panoramic Resources Ltd (ASX: PAN, OTC: PANRF), which resumed its dividend with an interim declaration of AUD0.01 per share after not paying a final dividend for fiscal 2012, omitted its final dividend for fiscal 2013.

Fiscal 2013 revenue was off by 22 percent to AUD181.8 million on weaker Australian dollar nickel prices and lower nickel deliveries, though cost of sales declined 11 percent.

The net loss after tax widened to AUD31.7 million from AUD18.2 million. Buy under USD0.35.

Sedgman Ltd (ASX: SDM, OTC: SGTDF) declared a final dividend of AUD0.02 per share, down from AUD0.065 a year ago. Revenue declined 33.1 percent to AUD435.5 million, as NPAT declined 75.1 percent to AUD9.4 million. Hold.

TFS Corp (ASX: TFC, OTC: TFSCF) declared a final dividend of AUD0.03 after not paying shareholders since November 2011.

Fiscal 2013 NPAT surged by 115.4 percent to AUD55.7 million, and operating cash flow was AUD21.8 million versus an outflow of AUD60.5 million for fiscal 2012. The beginning of its first sandalwood harvest signals good things for shareholders ahead. Hold.

Western Areas NL (ASX: WSA, OTC: WNARF) omitted its final dividend after cutting its fiscal 2013 interim dividend by 60 percent compared to fiscal 2012.

Management reported a fiscal 2013 net loss after tax of AUD94.1 million, including impairment charges of AUD99.7 million, though cash flow from operations was AUD112.1 million despite weak nickel prices. Production and costs both beat guidance, but policy is to pay from NPAT, and there was none. Buy under USD3.60.

Whitehaven Coal Ltd (ASX: WHC, OTC: WHITF) didn’t declare a final dividend after omitting its interim dividend.

Management reported a fiscal 2013 net loss after tax of AUD60.7 million, reversing a fiscal 2012 NPAT of AUD57.8 million due to “significantly” lower coal prices, care and maintenance of Sunnyside mine and writedowns at other projects. Net debt also surged. Buy under USD2.

Consumer Goods

GUD Holdings Ltd (ASX: GUD, OTC: GUDHF, ADR: GUDDY) management declared a final dividend of AUD0.26 per share, down from AUD0.35 a year ago. Management also declared a special dividend of AUD0.10 per share, finishing up the capital management strategy it announced along with the sale of the Breville unit in February 2012.

Reported EBIT was in line with guidance, down 20 percent AUD56.4 million. Total group sales were down 2 percent to AUD596.5 million, as sales increased in all business segments with the exception of Consumer Products, where both Sunbeam and Oates reported lower sales in the period. GUD is a buy for speculators under USD6.50.

Ridley Corp (ASX: RIC, OTC: RIDYF) didn’t declare a final dividend after omitting its interim dividend for fiscal 2013. Management reported a net loss of AUD21.7 million for fiscal 2013. Hold.

Consumer Services

APN News & Media Holdings Ltd (ASX: APN, OTC: APNDF) didn’t declare an interim dividend for 2013 after omitting its final dividend for 2012, as it continues to focus on repairing its balance sheet.

Management reported a net profit of AUD12.8 million for the six months ended June 30, turning from a loss of AUD308.2 million a year ago. Revenue was up 5 percent to AUD426.6 million, helped by AUD31.9 million from asset sales.

The advertising market remains challenged, and debt remains a concern. Sell.

Harvey Norman Holdings Ltd (ASX: HVN, OTC: None) boosted its final dividend by 12.5 percent after reducing its interim payout by 10 percent. That left the full-year 2023 dividend flat at AUD0.09 per share.

Fiscal 2013 NPAT was off by 17.5 percent year over year to AUD142.2 million, though NPAT excluding property revaluation adjustments was down just 3.3 percent to AUD183.4 million. Management noted improved second-half trading conditions, as lower interest rates spur consumers, and was positive on fiscal 2014. Hold.

Myer Holdings Ltd (ASX: MYR, OTC: MYGSF) reported that fiscal 2013 total sales were up 0.8 percent to AUD3.145 billion, as like-for-like sales rose 0.4 percent.

Operating margin improved by 40 basis points to 41.7 percent, but management still reduced the final dividend to AUD0.08 per share from AUD0.09. Buy under USD2.50.

Seven West Media Ltd’s (ASX: SWM, OTC: WANHF) final dividend was flat at AUD0.06 per share.

Fiscal 2013 NPAT excluding items was flat too at AUD225 million on revenue of AUD1.867 billion, though management reported a statutory net loss of AUD70 million on magazine business impairments. Management noted strong TV advertising and forecast low single-digit growth for fiscal 2014. Buy under USD2.

Southern Cross Media Group Ltd (ASX: SXL, OTC: SOUTF) reduced its final dividend from AUD0.05 a year ago to AUD0.045, as it reported net profit after tax of AUD96 million, ahead of guidance of AUD90 million to AUD95 million.

With the final dividend the company’s full-year payout ratio came to 66 percent, in line with company policy. Hold.

Tabcorp Holdings Ltd (ASX: TAH, OTC: TABCF) declared a final dividend of AUD0.08, down from AUD0.11 a year ago. Fiscal 2012 revenue was up 2 percent to AUD2.003 billion, though net profit from continuing operations slipped 13.1 percent to AUD139.1 million.

Management’s focus for fiscal 2014 is on digital wagering and retaining market share amid a challenging market. Tabcorp is a buy under USD3.35.

Tatts Group Ltd (ASX: TTS, OTC: TTSLF) final dividend was down to AUD0.075 from AUD0.12 a year ago, though fiscal 2013 revenue from continuing operations was up 11 percent to AUD2.949 billion and continuing NPAT grew by 40.8 percent to AUD227.4 million. Lotteries revenue rose 13.6 percent and wagering was up 5.2 percent. Buy under USD3.

Financials

QBE Insurance Ltd (ASX: QBE, OTC: QBEIF) cut its 2013 interim dividend by 50 percent, though it was in line with management policy to pay 50 percent of cash profit.

First-half NPAT slide 37.2 percent to USD477 million. Cash profit was down 30.1 percent to USD590 million due to lower investment yields. Hold.

Industrials

Boart Longyear (ASX: BLY, OTC: BOARF, ADR: BLGPY) omitted its 2013 interim dividend. Management reported a net loss for the first half of the year of USD329.4 million versus net income of USD97.7 million a year ago.

Management cut its 2013 EBITDA guidance to the low end of a USD116 million-to-USD159 million range from the low end of a previous range of USD199 million-to-USD271 million. Hold.

Boral Ltd (ASX: BLD, OTC: BOALF) raised its final dividend by 71.4 percent after reducing its fiscal 2013 interim dividend to AUD0.05 per share from AUD0.075. That left the full-year dividend flat at AUD0.11 per share.

Revenue from continuing operations was up 10.5 percent to AUD5.209 billion, though management reported a net loss of AUD212.1 million on AUD328.1 million in impairments and writeoffs. Net income excluding items was up 3.2 percent to AUD104.4 million. Hold.

Bradken Ltd (ASX: BKN, OTC: BRKNF) paid a fiscal 2013 final dividend of AUD0.18 per share, down from the AUD0.215 final dividend it paid for fiscal 2012. Full-year dividends were down 7 percent to AUD0.38.

Fiscal 2013 sales revenue was down 10 percent to AUD1.31 billion, as operating earnings before interest, taxation, depreciation and amortization (EBITDA) slipped 2 percent but beat guidance at AUD214 million. Bradken is a buy under USD5.25.

Emeco Holdings (ASX: EHL, OTC: None) omitted its final dividend, as fiscal 2013 operating NPAT declined 50.5 percent to AUD35.2 million. Statutory NPAT was just AUD6 million on charges and impairments totaling AUD32.6 million.

Management used positive cash flow of AUD60 million to pay down debt. Hold.

GWA Group Ltd (ASX: GWA, OTC: GWAXF, ADR: GWAXY) reported a 6 percent decline in fiscal 2013 underlying like-for-like sales, as trading EBIT declined 13 percent to AUD66 million. Net margin was flat, as costs declined 10 percent.

Cash flow was sufficient to cover the API acquisition, debt reduction and the dividend. But the latter was down 33 percent on a full-year basis after management declared a final of AUD0.06 versus AUD0.085 a year ago. Buy under USD2.

UGL Ltd (ASX: UGL, OTC: UGLFF) declared a final dividend of AUD0.05 per share, down from AUD0.36 a year ago as the slowdown in mining activity, delays and execution issues with projects, particularly in power, and general economic malaise

Fiscal 2013 operating revenue declined by 12 percent to AUD4.2 billion, though underlying NPAT of AUD92.1 million was in line with guidance. Management also announced a plan to de-merge its property services business. UGL is a hold.

Oil & Gas

Caltex Australia Ltd’s (ASX: CTX, OTC: CTXAF) interim dividend was flat at AUD0.17, as

2013 first-half historic cost profit came in at AUD195 million, up from AUD167 million a year ago.

Replacement cost profit slipped to AUD171 million from AUD197 million. But both historic and replacement figures were at the upper end of guidance. Buy under USD16.50.

Technology

Redflex Holdings Ltd (ASX: RDF, OTC: RFLXF) cut its final dividend by 40 percent after reducing its interim dividend by 33 percent. Fiscal 2013 revenue was down 6.1 percent to AUD137.4 million, as EBITDA slid 27.5 percent to AUD35.4 million.

NPAT of AUD8.6 million missed management guidance of AUD10 million. Sell.

SMS Management & Technology Ltd (ASX: SMX, OTC: SMSUF, ADR: SMSUY) declared a final dividend of AUD0.12 per share, down 29.4 percent from AUD0.17 a year ago.

That brought the fiscal 2013 full-year dividend to AUD0.255, 16.4 percent lower than the AUD0.305 paid for fiscal 2012.

Management reported net profit after tax (NPAT) of AUD21.1 million for fiscal 2013, 31 percent below fiscal 2012 largely due to a decline in client demand across a number of sectors. SMS remains a buy under USD6.50.

Telecommunications

Telecom Corp of New Zealand (ASX: NZT, OTC: NZTCF) reduced its final dividend by 27.3 percent, as fiscal 2013 revenue declined 8.5 percent to NZD4.189 billion. Adjusted EBITDA of NZD1.04 billion was in line with revised guidance, though NPAT ex-items was down 23.6 percent to NZD236 million. Sell.

The ADR List

We continue to track the How They Rate coverage universe and beyond for Australia-based companies that afford US investors the convenience of ADR investing, either on their initiative or via the effort of an interested financial institution.

Here again is our primer on Australian stocks, US OTC symbols and ADRs.

The great majority of the companies under How They Rate coverage have US symbols, many because they actively seek to raise capital here on their own accord. That means they comply, to varying degrees, with US Securities and Exchange Commission filing requirements for foreign companies and with US accounting principles. Others trade here because a sponsoring institution has effectively created a secondary market for the shares, without the underlying company’s active participation.

Shares traded on US OTC markets bearing a final “F” in their five-letter symbols are basically home-listed shares trading in a market created by and for US institutions. Individuals can buy and sell here, too. Prices basically reflect ASX prices and also reflect changes in the relationship between the US dollar and the Australian dollar. One “F” share represents one ASX-listed share. The dividend you receive in respect of an “F” share is the dividend paid in respect of the ASX-listed share, adjusted for currency effects.

An ADR is a certificate that represents stock of a foreign company. ADRs are listed on US stock exchanges or the OTC Bulletin Board or Pink Sheets. Those that trade OTC have five-letter symbols ending with the letter “Y.” All transactions, including dividend payments, are conducted in US dollars.

One ADR certificate may represent one or more shares of the foreign stock; it can also represent a fraction of a share. For example, one Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY) ADR, which trades under the symbol TLSYY, is worth five ordinary shares that trade on the Australian Securities Exchange under the symbol TLS. Australia & New Zealand Banking Group Ltd’s (ASX: ANZ, OTC: ANEWF, ADR: ANZBY) ADR, ANZBY, is worth one Australia-listed ANZ share.

Because many ADRs don’t have a one-to-one ratio between the depositary receipts and the shares of stock, financial ratios are often not included in stock listings. Data in Australian Edge Portfolio tables and How They Rate is derived based on Australian Securities Exchange symbols so is as complete as you’ll find anywhere.

Foreign companies themselves often “sponsor” the creation of their own ADRs. These are called “sponsored ADRs.” There are three levels of sponsorship.

A Level I sponsored ADR is created by a company because it wants to extend the market for its securities to the US. It does not, however, want to register with the Securities and Exchange Commission (SEC) or conform to generally accepted accounting principles (GAAP). Level I ADRs trade on the OTC Bulletin Board or Pink Sheets trading systems, usually but not exclusively by institutional investors. Australia & New Zealand Banking Group’s is a Level I ADR.

Level II and Level III sponsored ADRs must be registered with the SEC, and financial statements must be reconciled to generally accepted accounting principles. A Level II ADR requires partial compliance with GAAP, while a Level III ADR requires complete compliance. A Level III sponsorship is require if the ADR is a primary offering and is used to raise capital for the company. Only Level II and Level III sponsored ADRs can be listed on the New York Stock Exchange (NYSE), the American Stock Exchange or Nasdaq. Telstra Corp sponsors a Level III ADR in the US, meaning it’s actively seeking to raise capital here.

An unsponsored ADR is created by a US investment bank or brokerage that buys ordinary shares on the underlying company’s home market then deposits them in a local custodian bank. This depositary bank then issues shares that represent an interest in the stocks and handles most of the transactions with American investors, serving both as transfer agent and registrar for the ADR.

The shares of the foreign stock held in the custodian bank are called “American Depositary Shares,” although this term is sometimes used as a synonym for “American Depositary Receipts.” Unsponsored ADRs can’t be listed on the major American stock exchanges because they aren’t registered with the SEC and lack other necessary qualifications.

The price of an ADR is determined by supply and demand but will generally track the price of the underlying ordinary share. When dividends are paid, the custodian bank receives it and withholds any foreign taxes, exchanges it for US dollars and then sends it to the depositary bank, which then sends it to the investors.

The US depositary bank handles most of the interaction with US investors, including rights offerings, stock splits and stock dividends. Sponsored ADR investors may receive communications, including financial statements, directly from the company.

Here is a list of companies in the How They Rate coverage universe that have an ADR listing in the US, along with the number of ordinary ASX-listed shares the ADR represents.

Basic Materials          

• Alumina Ltd (ASX: AWC, NYSE: AWC)–One ADR is worth four ordinary shares.
• Aquarius Platinum Ltd (ASX: AQP, OTC: AQPBF, ADR: AQPTY)–One ADR is worth two ordinary shares.
• Arrium Ltd (ASX: ARI, OTC: ARRMF, ADR: OSTLY)–One ADR is worth 20 ordinary shares.
• BHP Billiton Ltd (ASX: BHP, NYSE: BHP)–One NYSE-listed ADR is worth two ordinary shares.
• BlueScope Steel Ltd (ASX: BSL, OTC: BLSFF, ADR: BLSFY)–One ADR is worth five ordinary shares.
• Fortescue Metals Group Ltd (ASX: FMG, OTC: FSUMF, ADR: FSUMY)–One ADR is worth five ordinary shares.
• Iluka Resources Ltd (ASX: ILU, OTC: ILKAF, ADR: ILKAY)–One ADR is worth five ordinary shares.
• Kingsgate Consolidated Ltd (ASX: KCN, OTC: KSKGF, ADR: KSKGY)–One ADR is worth one ordinary share.
• Mineral Resources Ltd (ASX: MIN, OTC: MALRF, ADR: MALRY)–One ADR is worth one ordinary share.
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)–One ADR is worth one ordinary share.
• Oz Minerals Ltd (ASX: OZL, OTC: OZMLF, ADR: OZMLY)–One ADR is worth 0.5 ordinary shares.
• Rio Tinto Ltd (ASX: RIO, NYSE: RIO)–One ADR is worth one ordinary share.

Consumer Goods

• Billabong International Ltd (ASX: BBG, OTC: BLLAF, ADR: BLLAY)–One ADR is worth two ordinary shares.
• Goodman Fielder Ltd (ASX: GFF, OTC: GDFLF, ADR: GDFLY)–One ADR is worth 10 ordinary shares.

Consumer Services

• Crown Ltd (ASX: CWN, OTC: CWLDF, ADR: CWLDY)–One ADR is worth two ordinary shares.
• David Jones Ltd (ASX: DJS, ADR: DJNSY)–One ADR is worth one ordinary share.
• Metcash Ltd (ASX: MTS, OTC: MCSHF, ADR: MHTLY)–One ADR is worth six ordinary shares.
• TABCORP Holdings Ltd (ASX: TAH, OTC: TABCF, ADR: TACBY)–One ADR is worth two ordinary shares.
• Wesfarmers Ltd (ASX: WES, OTC: WFAFF, ADR: WFAFY)–One ADR is worth 0.5 ordinary share.

Financials

• Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY)–One ADR is worth one ordinary share.
• Commonwealth Bank of Australia Ltd (ASX: CBA, OTC: CBAUF, ADR: CMWAY)–One ADR is worth one ordinary share.
• National Australia Bank Ltd (ASX: NAB, OTC: NAUBF, ADR: NABZY)–One ADR is worth one ordinary share.
• QBE Insurance Ltd (ASX: QBE, OTC: QBEIF, ADR: QBIEY)–One ADR is worth one ordinary share.
• Westfield Group Ltd (ASX: WDC, OTC: WEFIF, ADR: WFGPY)–One ADR is worth two ordinary shares.
• Westpac Banking Corp Ltd (ASX: WBC, NYSE: WBK)–One ADR is worth five ordinary shares.

Health Care

• Ansell Ltd (ASX: ANN, OTC: ANSLF, ADR: ANSLY)–One ADR is worth four ordinary shares.
• Cochlear Ltd (ASX: COH, OTC: CHEOF, ADR: CHEOY)–One ADR is worth 0.5 ordinary share.
• CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY)–One ADR is worth 0.5 ordinary share.
• Sonic Healthcare Ltd (ASX: SHL, OTC: SKHCF, ADR: SKHCY)–One ADR is worth one ordinary share.

Industrials

• Amcor Ltd (ASX: AMC, OTC: AMCRF, ADR: AMCRY)–One ADR is worth four ordinary shares.
• Boral Ltd (ASX: BLD, OTC: BOALF, ADR: BOALY)–One ADR is worth four ordinary shares.
• GWA Group Ltd (ASX: GWA, OTC: GWAXF, ADR: GWAXY)–One ADR is worth four ordinary shares.
• Toll Holdings Ltd (ASX: TOL, OTC: THKUF, ADR: THKUY)–One ADR is worth two ordinary shares.

Oil & Gas

• Beach Energy Ltd (ASX: BPT, OTC: BEPTF, ADR: BCHEY)–One ADR is worth 20 ordinary shares.
• Boart Longyear Ltd (ASX: BLY, OTC: BOARF, ADR: BLGPY)–One ADR is worth two ordinary shares.
• Caltex Australia Ltd (ASX: CTX, OTC: CTXAF, ADR: CTXAY)–One ADR is worth two ordinary shares.
• Oil Search Ltd (ASX: OSH, OTC: OISHF, ADR: OISHY)–One ADR is worth 10 ordinary shares.
• Santos Ltd (ASX: STO, OTC: STOSF, ADR: SSLTY)–One ADR is worth one ordinary share.
• Woodside Petroleum Ltd (ASX: WPL, OTC: WOPEF, ADR: WOPEY)–One ADR is worth one ordinary share.
• WorleyParsons Ltd (ASX: WOR, OTC: WYGPF, ADR: WYGPY)–One ADR represents one ordinary share.

Technology

• Redflex Holdings Ltd (ASX: RDF, OTC: RFLXF, ADR: RFLXY)–One ADR is worth eight ordinary shares.
• SMS Management & Technology Ltd (ASX: SMX, OTC: SMSUF, ADR: SMSUY)–One ADR is worth two ordinary shares.

Telecommunications  

• Singapore Telecommunications Ltd (Singapore: ST, ASX: SGT, OTC: SNGNF, ADR: SGAPY)–One ADR is worth 10 ordinary shares.
• Telecom Corp of New Zealand Ltd (ASX: TEL, NYSE: NZT)–One ADR is worth five ordinary shares.
• Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY)–One ADR is worth five ordinary shares.

Utilities

• AGL Energy Ltd (ASX: AGK, OTC: AGLNF, ADR: AGLNY)–One ADR is worth one ordinary share.
• Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY)–One ADR is worth one ordinary share.