An Undiscovered Paradise for Income Investors

      No matter what happens in 2008, most economists agree that, over the long run, the U.S. economy is likely to post GDP growth of around +3% annually. That's very respectable for a large, developed economy.

      With a total GDP of more than $13 trillion, that means that the U.S. economy grows roughly $400 billion a year. To put that number into perspective, consider that Belgium's entire annual GDP stands at only $390 billion. Meanwhile, Saudi Arabia's annual GDP is less than $310 billion.

      Countries normally grow fastest during the early stages of their economic development. A century ago, for example, it wasn't unusual for the U.S. to deliver real economic growth of close to +10% per year. As the country moved from being a primarily agrarian society to a global industrialized power, U.S. manufacturing, industrial, and eventually service-sector businesses blossomed. These industries, in turn, paid out higher wages that led to the emergence of a large middle class and the development of a powerful consumer sector.

      And the U.S. is by no means an unusual example -- a number of other countries have followed this exact same pattern. Consider the case of the U.K. in the late 18th and throughout the 19th century. In 1750, England was still a largely agrarian nation with a total GDP roughly equivalent to what it was 500 years earlier. But as Britain began to industrialize, growth began to pick up, making Great Britain the world's preeminent economic and military power by the mid 19th century. Like the U.S., a sizeable middle class began to emerge in Britain.

      Imagine the gains you would have earned if you had invested in the U.S. or U.K. early in their development, just as each country's economic growth rate was accelerating. The potential returns for investors during these growth phases were enormous.

      But investors don't have to just imagine that scenario -- today's emerging markets offer growth potential every bit as strong as the U.S. or U.K. markets did a century and two centuries ago. And as we all know, China remains far and away one of today's most exciting growth markets.

But China is starting to undergo the same rapid transformation from economic backwater to a modern industrial power. Eventually, China may reach a wealth level similar to what prevails in the U.S. or Western Europe, and at that point its tremendous economic growth will likely slow. However, even if that scenario does unfold, that's still decades away -- average growth in China will likely continue to trend higher than in the U.S. for years to come.

      An Attractive Market for Income Investors
      Historically, China hasn't been known as a great hunting ground for income investors. However, more and more Chinese firms are starting to pay dividends, and a select handful of stocks are now delivering enormous yields.

      This trend toward higher dividends is being fueled by strong economic growth. Thanks to the nation's booming economy, many companies have suddenly found themselves awash in huge cash reserves -- cash they are eager to get back in the hands of their shareholders.

      Consider the case of Seaspan Corporation (NYSE: SSW), a major player in the Chinese shipping industry. This firm has increased its quarterly dividend +93% in the past two years alone, and Seaspan now showers investors with a tantalizing 7% yield. I think the firm's payments will keep rising as global demand for shipping powers Seaspan's earnings higher.

      But as any good investor will tell you, dividend payments are only one part of your total returns. If you invest in securities that also appreciate in price while paying steady dividends, then your total returns could skyrocket. And shares of Seaspan have done just that. In fact, since the start of 2006, shares of SSW have jumped +50% higher, giving investors a total return of +71.8% when you include the impact of dividends.

      Examples like Seaspan show just how lucrative it can be to invest in high-yield stocks. And when it comes to the search for high yields, there's no better place to look than foreign markets.  In fact, recent research shows that 93% of the highest-yielding stocks in the world can be found abroad.

      With this in mind, I recently teamed up with one of the most experienced publishers on the planet -- leading stock market research outfit StreetAuthority, LLC.  We've worked together to launch High-Yield International -- a brand new publication dedicated to helping you find foreign companies that are delivering some of the greatest dividends in the world. 

      If you're limiting your portfolio solely to U.S. stocks and funds, then you're missing out on some of the world's very best income opportunities. Many of the undiscovered gems I profile in High-Yield International pay dividends of 10%, 12% . . . even 15% or more. Yields like this are simply too good to pass up.  But because of their narrow focus, most U.S. investors don't even know these dividend-paying securities exist!

      Visit this link to learn more about my High-Yield International newsletter.

-- Nick Lanyi
Editor, High-Yield International