Don't Miss Out on This Dividend Gold Mine

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Dividend stocks give you the perfect combination of current income and growth potential. Yet while many dividend investors stay close to home with their portfolios, promising dividend payers from around the world can give you some added benefits that U.S. stocks can't.

Plenty of dividends to go around
Right now, income-seeking investors don't have look too far afield to find attractive dividend yields on stocks. Even big, well-known stocks like AT&T (NYSE: T) and Southern Company (NYSE: SO) are paying dividend yields of 5% or more right now. And with yields on fixed-income securities like Treasury bonds at relatively low levels, it's reasonably easy to find a number of good dividend-stock alternatives that will pay you more.

But some dividend investors never realize that many foreign companies pay dividends as well. Although the payouts can be somewhat different -- you won't necessarily get payouts every quarter, as some companies prefer to make distributions once or twice a year instead -- the net impact is the same: more income from your portfolio. Even better, foreign dividend stocks have had outstanding performance in recent years.

Finding foreign dividend stocks
The problem, however, is that it's not always easy to get access to promising foreign dividend stocks. Of course, many good companies, such as BP (NYSE: BP), Total (NYSE: TOT), and France Telecom (NYSE: FTE), have shares that are listed on U.S. stock exchanges, and are therefore easy for U.S. investors to buy. But for a large number of other companies, you'd have to get trading rights to the foreign exchanges where they've listed their shares in order to buy and sell the stocks.

Luckily, the emergence of exchange-traded funds (ETFs) has made that task easier. One of the most valuable uses of ETFs is to bridge the gap between U.S. investors and foreign investments. Rather than trying to navigate the global financial markets on your own, an ETF gives you a one-stop shopping experience by which you can get exposure to hard-to-reach assets in a single trade.

In this case, the SPDR S&P International Dividend ETF (DWX) invests in nearly 100 different companies around the world. While the fund includes U.S.-traded companies such as Eni (NYSE: E) and Nordic American Tanker (NYSE: NAT), it also has many investments that aren't as readily available. With its greatest emphasis on companies in Australia, Europe, and Canada, the ETF currently yields more than 5%.

What foreign stocks offer
Foreign dividend stocks combine the benefits of dividend-paying investments with the unique advantages of investing a portion of your assets outside the U.S. For instance, many people are concerned that a falling dollar could wreak havoc upon some of the U.S. companies in their portfolios. Companies whose revenue is primarily composed of foreign currencies, however, should see their shares rise in value in U.S. dollar terms, if the dollar falls.

In addition, foreign stocks let you diversify from political and economic risk. Although the U.S. has historically been one of the most stable countries in the world, many investors are increasingly uncertain whether ballooning government spending and continuing economic challenges will allow it to maintain its leadership role. Meanwhile, business opportunities around the world, especially in emerging-market countries like China and India, may give foreign companies a chance to get a leg up on their U.S. competitors and build footholds in new markets. Some even think that last year's market meltdown unfairly punished international stocks, and that even after the recent rally, they're still primed for big gains.

Finally, despite their strong performance for much of the decade, international stocks still have a relatively small place in most investors' portfolios. As the economy continues to become more global, however, you can expect more investors to jump on the international investing bandwagon -- and that, in turn, will support prices of foreign assets, potentially at the expense of their U.S. counterparts.

Go forth and invest
So if you're a dividend investor looking to broaden your horizons, consider foreign stocks with healthy payouts. Whether you invest directly in foreign dividend stocks or use an ETF, the added diversification will help strengthen your portfolio.