Double Your Dividends by Investing
in Foreign Companies

       Imagine going to a supermarket and shopping in just half of the aisles, or opening a restaurant menu and limiting your dinner choices to the entrees listed on just one of the pages.

       This is essentially what investors with no foreign exposure are doing with their portfolios. 

       In years past, most of the world's stock market capitalization was locked up in the United States. However, trillions of dollars in market wealth has been created overseas in the past decade, and there are now actually more opportunities outside our borders than within.

       Take banks, for example. In terms of assets, seven of the top ten banks in the world are foreign-based companies. And the story is similar across most other industries, from retailers to steelmakers to electronics manufacturers -- many future industry bellwethers are located outside the U.S.

       And aside from a greatly expanded pool of investment ideas, there are several other reasons to consider foreign investments. Most importantly, stock prices are heavily influenced by economic expansion and overall corporate profitability. And as the world's largest economy (with a gross domestic product (GDP) in excess of $13 trillion), it is virtually impossible for the U.S. to deliver the robust growth rates that it has posted in decades past.

       Fortunately, many other countries around the world are at far earlier stages on the economic development path and should see much higher growth rates than the United States for years to come. As you can see from my chart, while the U.S. economy is still dominant, it simply can't match the growth that is taking place in markets like China and India.

       Considering the link between economic expansion and equity prices, it's not surprising that U.S. stocks have struggled to keep pace with the rest of the world.

       From September 2002 to September 2007, the S&P 500 delivered average gains of about +12% per year. While that return is certainly respectable, it lagged most foreign benchmarks -- stocks jumped nearly +20% per year in Europe, +25% in Pacific Asia, and +40% in Latin America over the same time frame.

       Clearly, there is something to be said for casting a wider net, and investors who have done so have been well rewarded. Over the past 15 years, the benchmark S&P 500 has not once been the top-performing stock market worldwide in any given calendar year. In 2006, for example, it failed to even break the top ten -- the +14% return of the S&P 500 wasn't even within shouting distance of, say, Venezuela's impressive +156% surge.

Dividends Play a Leading Role

       Of course, it goes without saying that in many developed markets overseas -- just like in the United States -- a large percentage of those total returns are comprised of dividends. In fact, those who invest in foreign stocks will find that yields throughout Europe and in many other regions are actually far superior to those typically seen here.

       According to Jill Evans, manager of the Alpine Dynamic Dividend Fund (ADVDX), yields on foreign exchanges are currently running about double the meager average payout of roughly 2% among S&P 500 firms -- and fatter quarterly paychecks are just the beginning.

       Whether it's Brazil, Hong Kong, or Turkey, dividends send the same message in any language. Specifically, recurring dividends represent millions (or even billions) in annual payments to shareholders. And companies that can meet that obligation in both good times and bad can usually be counted on to deliver consistent cash flows.

       Furthermore, dividends can also act as a built-in safety net in a falling market. As the price of a stock drops, its yield rises -- thereby attracting investors. This tends to prop up dividend payers in a down market and can even set a floor on the share price.

       Simply put: dividend-paying stocks can usually be trusted to deliver above-average long-term returns with less volatility than the broader market. According to renowned professor and market researcher Jeremy Siegel, the top 100 highest-yielding stocks in the S&P 500 have returned +3% more per year on average than the index as a whole.

       And if dividends can make that much of a difference in our low-yield domestic environment, imagine what the generous 8%, 10% . . . even 15% yields commonly found overseas can do for your portfolio. These are exactly the types of stable, high-yielding foreign companies I introduce my readers to every month in my premium newsletter -- High-Yield International.

       It's the only publication of its kind dedicated exclusively to finding high-yielding securities in foreign markets. My mission is to show my subscribers how they can earn steady yields of 8% . . . 10% . . . even 15% or more by investing in these foreign millionaire makers.

       To learn more about my High-Yield International newsletter, please visit this link.

-- Nick Lanyi
Editor, High-Yield International