A convenient way to trade foreign stocks

American depositary receipts provide individual investors with a way to invest overseas using U.S. exchanges and U.S. dollars.

Adam Zoll 22 December, 2014 | 1:00PM

Question: I occasionally see the letters "ADR" after the name of a stock. What do they stand for?

Answer: ADR stands for American depositary receipt and refers to a vehicle for trading non-U.S. stocks on U.S. exchanges. An ADR is like a stock certificate good for a specified number of shares in an overseas company, and the price of an ADR is linked to the price of the company's stock in its home country. ADRs are denominated in U.S. dollars, with dividends paid in U.S. dollars, as well. And like U.S. stocks, they are subject to the regulations of the Securities and Exchange Commission.

Special structure

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BP PLC ADR24.37 USD-0.08
GlaxoSmithKline PLC ADR37.22 USD-1.77
Royal Dutch Shell PLC ADR Class A35.31 USD1.20
Toyota Motor Corp ADR116.71 USD-2.70
Vodafone Group PLC ADR13.36 USD-2.98

About Author

Adam Zoll

Adam Zoll  Adam Zoll is an assistant site editor with Morningstar.com