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In the 16th century, European adventurers sailed across the Atlantic to a new land, in search of better lives than they could find in the Old Country. Their settlements grew into colonies that eventually became the United States of America, now the world's largest economy by far.
In the 21st
century, limiting one's portfolio to U.S. stocks is akin to
keeping one's television tuned to one channel -- you'll find some
enticing offerings, but you'll miss out on so much more. CDs pay less than 4%, before inflation. T-bills barely pay 1%. And the average U.S. stock pays just 2.1%. (We now have the lowest-yielding stock market in the world, apart from Japan's.)
It's a cash-flow desert here in America for anyone who needs to
bank a comfortable income off their portfolio. So if you
want to truly maximize the income-generating power of your
portfolio, then you need to invest overseas.
The average stock in the U.S. sports a dividend yield of just 2.1%. But in almost every other country around the
world, stocks offer significantly higher yields. This phenomenon has occurred for three main
reasons . . . 2.) Many industries in foreign countries are dominated by state-sanctioned monopolies. These old-school companies, with strong ties to the government, tend to be the most stable -- and some of the highest-yielding -- on the planet. 3.) The largest companies in emerging markets need to offer higher-than-average yields to attract foreign investors. These high dividend payments serve to entice investors from developed countries, including deep-pocketed institutional investors.
So if you want to capture some of the
highest yields on the market, and profit from
today's fastest-growing economies, then you need to be looking overseas. The U.S. economy has continued to slow in 2008, and all signs point to a possible recession in the coming months. In fact, we might already be in the midst of one. Between the mortgage mess and the credit crisis . . . record oil prices and nagging inflation . . . the budget deficit and the trade gap . . . it all adds up to a pretty strong headwind for U.S. investors. Fed Chairman Bernanke has said so himself. As the world's largest economy, it is virtually impossible for the U.S. to deliver the robust growth rates that it has posted in decades past. This could lead to continued losses for U.S. stocks (or sluggish, below-average returns, at best). Fortunately, many other countries around the world are at far earlier stages on the economic development path and should deliver much higher growth rates than the U.S. for years to come. As you can see from my chart, the U.S. economy simply can't match the growth that's taking place in foreign markets.
It used to be said that when America sneezes, the world catches a cold. Now, it's more like a sniffle. The reason is globalization and the wealth-spreading effects that flow from it. Consumers, producers, exporters and financiers who once depended on the U.S. now can turn elsewhere.
The global economy used to resemble a bicycle wheel with the U.S.
in the middle, the fixed spokes radiating out representing our
purchases and sales with all the other players. In the 21st
century, it makes more sense to imagine an intricate spider's web;
the U.S. remains central, but globalization allows strong but
flexible strands to be woven constantly, in all directions. Similar trends are in place in Brazil, Russia and many other countries, such as South Korea. These nations should continue to deliver exceptional growth as their economies catch up to the developed levels enjoyed by the U.S., Western Europe and Japan. Foreign Markets Deliver Gains of up to +180% Strong economic growth leads to sharply-rising equity prices. So it's not surprising that foreign stock markets are delivering tremendous returns. While the S&P 500 had a lackluster 2007, rising just +3.5%, just look at the returns posted by other stock markets around the world . . .
U.S. stocks have never moved like this. Never. The highest one-year gain the S&P 500 ever reported was +45% -- and that was a lifetime ago . . . in 1954. In 2007, the S&P 500 didn't even crack the top 50, coming in 76th out of the world's 90 major stock-market indexes. A Perfect Situation for Income Investors Thanks to their combination of strong yields and enormous capital gains, foreign markets are the single greatest place for American investors to look for dependable high-income plays today. In fact, research shows that 91% of the world's highest-yielding stocks are now located overseas (see details here). That's why I decided to team up with StreetAuthority, LLC -- one of the nation's leading publishers of unbiased, independent market research -- to launch my new premium newsletter . . . High-Yield International. It's the only newsletter of its kind devoted exclusively to finding high-yielding securities in today's best-performing foreign markets. In recent issues, I've profiled some of the most attractive dividend payers on the planet, including a rock-solid Australian utility with a 20.8% yield, an international shipping company paying 14.5%, an emerging Europe fund with a 21.6% yield, and a diversified real estate fund with dividends of 23.0%, among many others. If you'd like to learn the names of these companies -- plus receive a steady stream of foreign stocks, funds and other investing ideas with abnormally high dividend yields each and every month -- then I'd like to extend you a personal invitation to try my premium international investing newsletter . . . High-Yield International. Visit this link to learn more.
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