After "How big is the yield?" the second question you should ask as an income investor is "How safe is the yield?" Whether you rely on the distributions to pay the bills or reinvest them to boost your returns, you want to know that your investments will continue to pay for years to come. This is why you should look for companies protected by wide economic moats with low payout ratios. These two factors will go a long way toward helping you build a rock-solid dividend portfolio, but I suggest you also look for high yielders with significant international exposure.
Why go global?
From a dividend perspective, the biggest advantage of looking for companies with international exposure is that global diversity helps the company generate the consistent cash flows necessary to maintain -- and ideally increase -- its dividend. For example, look at Philip Morris International
Another advantage of global companies is the potential for growth in emerging markets. Consider Yum! Brands
Time to break out the passport
Philip Morris and Yum! Brands both hold positions in my portfolio, but I'm always on the lookout for dividend-paying stocks with similar international exposure. Here are three such stocks from my watchlist.
If you're looking to add a tech dividend to your portfolio, Intel's
For those of you looking for a good sin stock, but who have qualms about investing in tobacco, there's global booze maker Diageo
These are just a handful of the opportunities awaiting investors willing to take a more global view. If you'd like to learn about two more stocks prepared to profit in emerging markets and read more about Yum! Brands, then check out this special report "3 American Companies Set to Dominate the World." It's absolutely free, so click here to download it today.
The Motley Fool owns shares of Diageo, Yum! Brands, Philip Morris International, and Intel. The Fool has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Yum! Brands, Philip Morris International, Diageo, Vodafone Group, and Intel. Motley Fool newsletter services have recommended creating a bull call spread position in Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Fool contributor Patrick Martin owns shares of Philip Morris International and Yum! Brands. You can follow him on twitter @TMFpcmart03. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.