Editor's Note: The original version of this story provided an incorrect dividend for Qwest. The correct yield of 5.7% has been substituted. The Fool regrets the error.

Even though U.S. blue chips like Hershey (NYSE: HSY) and Abbott Labs (NYSE: ABT) have helped investors accumulate fortunes in the past, the temptation to look abroad for the world's best dividend stocks remains strong.

Many foreign stocks offer higher dividend yields than their U.S. counterparts. For example, Telecom Corp. of New Zealand doles out a voluptuous 8.2% dividend, versus U.S.-based Qwest's (NYSE: Q) smaller 5.7%.

Not all created equal
Despite the tremendous opportunities available to generate income from companies abroad, stateside investors need to know about a couple of things before stamping their passports:

  • Dividend regularity -- or lack thereof. Foreign-company dividends can indeed be larger than U.S. companies', but they're often less regular in timing and amount. Companies abroad like to pay a target percentage of earnings, instead of a certain cash value every year. Don't knock it: Freed from the pressure to lowball their payouts, these companies can pay you more over the long haul.
  • Dividend taxation. Foreign countries (except for those in the U.K.) can scalp you at their going rate. Still, most countries in which you're likely to invest have tax treaties with the United States, so you can claim a credit for the tax withheld. But here's the rub: Because a credit offsets taxes you would have otherwise paid, it's smart to hold foreign stocks in a taxable account. In other words, skip the IRA if you're going abroad.

Of course, not all foreign dividend stocks are created equal. So each week, we'll highlight a five-star foreign dividend payer with the assistance of the 83,000 investors participating in Motley Fool CAPS, the Fool's free investing community. After all, having a second (or 300th!) pair of eyes can help you separate the wheat from the chaff.

The land of Aristotle and Socrates    
Very few publicly traded banks around the world can say their shares are trading higher since February 2007. For instance, Wachovia (NYSE: WB) and Barclays (NYSE: BCS) are both down more than 40%. One bank that can say it's in the black in these dark banking days: Motley Fool Income Investor pick National Bank of Greece (NYSE: NBG), which is up 11%.

On the dividend front, the stock's paid a total of $0.27 per share in the past 12 months, for a yield of 2.3%. While that dividend yield won't blow your socks off, keep in mind that foreign companies generally pay out a percentage of profits, instead of a target dollar amount (as mentioned above). Moreover, NBG is expected to increase its payout ratio to roughly 50% of earnings, and with the company's strong presence in high-growth regions of southeastern Europe and Turkey, continued earnings growth looks promising.

How will NBG perform going forward? Let's look at a bullish pitch that CAPS player ghalsey made in December: "NBG's location in emerging markets, as well as its commanding share of the banking industry in regions that are on the cusp of EU membership, make it a long-term player in International Banking."

Investors should be mindful of this point, however, given Kosovo's recent declaration of independence, and the geopolitical fallout it has caused between Russia and Serbia on one side and Western Europe and the U.S. on the other.

With 315 of 322 CAPS players believing that National Bank of Greece will outperform the S&P 500 going forward, it's hard to find a good bearish opinion on it. For instance, grammatoncleric is bearish on NBG simply because it is "foreign banking."

In this Fool's opinion, that reasoning is a bit naive. Sure, there are some bad banks (foreign and domestic) out there, but some banks are definitely worth considering in this market. National Bank of Greece is one of those banks, but investors should closely consider the higher political risks of the region before investing, especially following the news from Kosovo.

What do you think about National Bank of Greece -- or any other stock, for that matter? Make your voice heard on Motley Fool CAPS today.

National Bank of Greece is a Motley Fool Income Investor pick. Discover our full Foolish list of dividend dynamos with a free 30-day trial

For the record, Fool contributor Todd Wenning's favorite Philly cheesesteak is not Pat's or Geno's -- it's Larry's on 54th and City Avenue. He does not own shares of any company mentioned. The Fool's disclosure policy is going streaking through the quad and into the gymnasium.