5 Fabulous Foreign Companies

Ignoring international investments can significantly diminish your portfolio's potential. Just take a look at these returns over the past 15 years.

Data: Morningstar.com.

In many cases, international markets were returning more than our own. Clearly, adding a global element to your portfolio can help boost your returns and provide important diversification.

But if you're new to global investing, how can you get started?

A few ideas
To add foreign exposure to your portfolio, you might buy American companies that do a substantial portion of their business abroad, such as McDonald's (NYSE: MCD). This strategy gives you all of the familiarity of a domestic company, but with the added power of international revenues.

You could also focus on foreign companies you're familiar with; Honda and BP (NYSE: BP), for instance, aren't new to most of us.

If you've got a particular industry you know well, you could expand your search to international companies in your area of expertise. For example, if you're familiar with AT&T (NYSE: T) or Verizon (NYSE: VZ), look at Vodafone.

Go big; don't go home
Just because a company is foreign doesn't mean it has to be significantly more complicated or risky than a domestic company. Just as you would here, you should look for factors such as strong brands, solid and growing profit margins, respectable growth rates, robust dividends, competitive advantages, and impressive track records.

Here are a few companies for further research that fit that bill:

• Diageo (NYSE: DEO) is one of the world's biggest alcoholic-beverage companies, with well-known brands including Smirnoff, Johnnie Walker, Captain Morgan, and Guinness. Based in London, it sports a dividend yield close to 3% and has thumped the market with a nearly 11% average annual gain over the past decade.
• Novartis AG (NYSE: NVS), a global pharmaceuticals giant based in Switzerland, rakes in more than $40 billion annually and has averaged 10% growth over the past decade. Its dividend yield was recently 3.6%, having grown by an average of 19% annually over the past five years.
• PotashCorp (NYSE: POT), based in Canada, is the world's leading fertilizer producer, focusing on potash, phosphate, and nitrogen. It takes in about $4 billion annually, and its stock has grown by a whopping 31% annually, on average, over the past decade.
• BP, based in the United Kingdom, is one of the world's biggest energy outfits, with annual sales of more than $200 billion, oil equivalent reserves of more than 18 billion barrels, and a dividend yield recently near 6%. Its 10-year stock growth average is 5%, which still tops the S&P 500 handily.
• Tata Motors is India's biggest carmaker, raking in some $17 billion annually. It's also the world's fourth-largest truck maker and second-largest bus maker, and it recently bought the Jaguar and Land Rover names.

It's easy to just assume that international investing is too mysterious and confusing for ordinary individual investors to deal with. But that's not the case. Focusing your investing on large-cap companies with a global reach can give you both stability and international exposure.

Grab diversity and growth
Once you're comfortable investing in stable economies abroad, consider expanding your reach to emerging economies, many of which are growing much more quickly than our older, more established one.

We'd love to point you to big and small global players that our internationally savvy analysts are excited about. Try our Motley Fool Global Gains investment service free for 30 days. During your free trial, you'll be able to access every issue and read about every recommendation. You have nothing to lose, and the world to gain. Click here to give it a shot.

Longtime Fool contributor Selena Maranjian owns shares of McDonald's and Novartis AG. Novartis AG is a Motley Fool Global Gains selection. Diageo is an Income Investor pick. The Motley Fool is Fools writing for Fools.