Even though U.S. blue chips like Schering-Plough (NYSE: SGP) and General Mills (NYSE: GIS) have helped investors accumulate fortunes in the past, the temptation to look abroad for the world's best dividend stocks remains strong.

For one, many foreign stocks offer higher dividend yields than their U.S. counterparts do. For example, New Zealand Telecom (NYSE: NZT) doles out a voluptuous 7.7% dividend, versus U.S.-based Verizon's (NYSE: VZ) smaller though still appealing 4.7%.

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.

One for the Anglophiles       
In the past five years, emerging markets have gobbled up resources to build infrastructure for their growing economies. Mining and metals companies Southern Copper (NYSE: PCU) and BHP Billiton (NYSE: BHP) have profited handsomely, to the tune of 1,800% and 550% gains, respectively, since February 2003. U.K.-based Anglo American (Nasdaq: AAUK), the world's second-largest mining company, has grown 390% over the same period.

On the dividend front, shares have paid a total of $2.20 per share in the past 12 months, for a yield of 7.6%. With the headwinds of rising copper and platinum prices at its back, Anglo American continues to be an investor favorite on CAPS.

How will Anglo American perform going forward? Let's look at a bullish pitch that CAPS player surfsnowtrail made two months ago:

Strong financial situation. Been buying back lots of shares and still has a lot of cash in the bank. Look to buy others or be bought.

That's fairly accurate. As of June 2007, Anglo American had $2 billion in cash and short-term equivalents on its balance sheet, and the company began a $4 billion share-repurchase program in October. Moreover, there has been recent merger news in the sector, with BHP Billiton trying to grab hold of Rio Tinto, and rumors of talks between Anglo and Xstrata.  

With 553 of 567 CAPS players believing Anglo American will outperform the S&P 500 going forward, it's hard to find a good bearish opinion on it. But have no fear -- here's a recent bear opinion on the industry from the Southern Copper page, brought to you by player JPDemers, who calls into question the emerging markets' continued demand for precious metals: "I'm betting that the overheated Asian economies (read: China and India) are going to cool off quickly, as exports to the sagging U.S. market come crashing down. If so, demand for metals, forest products, and oil will drop considerably from present levels."

In this Fool's opinion, Anglo American is a worthy candidate for further research if you're looking to gain exposure to the metals market. But beware: Commodity stocks can be quite volatile, so be sure to do your homework and carefully review your portfolio before making a venture into this sector.

What do you think about Anglo American, or any stock, for that matter? Make your voice heard on Motley Fool CAPS today.

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.