The emerging market stocks have been the hot commodity amongst equity investors in 2010, as money has found its way back to the growth regions of the world. The MSCI Emerging Markets Index is up 12.5% versus a gain of 9% for the S&P 500.
IN PICTURES: 9 Simple Investing Ratios You Need To Know

Because investors have realized that consistent big gains in stocks may no longer be the norm, they are also seeking high dividend yields. So why not put the two together: emerging market and high yields?

This has led me to search out emerging market stocks that offer growth as well as above-average dividend yields. Surprisingly there are more stocks that fall into this category than most would realize. And they are listed below.

All Encompassing ETF
The WisdomTree Emerging Markets High-Yielding Equity ETF (NYSE:DEM) is a one-stop option for investors that are seeking emerging growth exposure combined with a solid dividend yield. Since the ETFs inception in July 2007, DEM has outperformed 99% of all emerging market funds. The ETF is up 19% in 2010 and currently has a distribution yield of 4.4%. (For more, see A Dose Of International Dividends.)

The country makeup is heavily weighted towards Brazil (19%) and Taiwan (18%), but there is also exposure to Turkey, South Africa and Israel. When looking for high dividend paying stocks there are two sectors that typically offer the best yield - telecoms and financials. The two sectors make up 45% of the allocation of DEM.

DEM is a great choice for investors who do not want to take on company-specific risk. (For more, see Going International.)

Three Stocks
An easy way for investors to discover new stock ideas is to look at the top holdings of an ETF you like as an investment. I did just that with DEM and came up with three stock ideas.

The number two holding of DEM is Taiwan Semiconductor (NYSE:TSM), a large semiconductor company that supplies chips to numerous sectors around the globe. TSM currently pays a 3.3% dividend and trades at a reasonable forward P/E ratio of 11.8 and a PEG ratio of 0.75. Fundamentally TSM is attractive, but if the entire chip sector slows, TSM will fall with the masses. This is a high-risk play in the current environment.

Ambev (NYSE:ABV), based in Brazil, is one of the largest brewers in South America and is known for its Skol, Brahma and Antarctica brands of beers. The company also has a deal with Anheuser-Busch Inbev (NYSE:BUD) to distribute Budweiser products in Canada. The current dividend is 2.1% and the stock is sitting just below an all-time high after rallying nearly 40% in 2010. The forward P/E ratio is 18.2 and the PEG ratio is 1.65. ABV is clearly a leader in its sector, but must pullback more to make it a more attractive buying situation. (For more, see Beeronomics: Factors Affecting Your Pint.)

Chunghwa Telecom (NYSE:CHT) is another Taiwanese company that provides a variety of telecom and internet services throughout the country. The stock has had a solid 2010, gaining 35% and offering a 4.0% dividend yield. The forward P/E is only 16.3 even after the rally, but the PEG ratio is an abnormally high 7.3 based on lower growth estimates. If the stock pulls back to the low $20's it could be considered a buy again.

Bottom Line
The astute investor can continue to comb through the holdings of DEM and pick out a few stocks to build their own small ETF. However, most investors are better off with simply buying DEM and taking away the extra risk and time involved with individual stocks. (For more, see 4 ETF Strategies For A Down Market.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    The Top 5 Large Cap Core ETFs for 2016 (VUG, SPLV)

    Look out for these five ETFs in 2016, and learn why investors should closely watch how the Federal Reserve moves heading into the new year.
  2. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  3. Fundamental Analysis

    5 Must-Have Metrics For Value Investors

    Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know.
  4. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  5. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  6. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  7. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  8. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  9. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  10. Stock Analysis

    The Top 5 Micro Cap Alternative Energy Stocks for 2016 (AMSC, SLTD)

    Follow a cautious approach when purchasing micro-cap stocks in the alternative energy sector. Learn about five alternative energy micro-caps worth considering.
  1. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  2. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  3. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  4. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  5. What is the formula for calculating the current ratio?

    The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability ... Read Full Answer >>
  6. What is the formula for calculating earnings per share (EPS)?

    Earnings per share (EPS) is the portion of a company’s profit that is allocated to each outstanding share of common stock, ... Read Full Answer >>
Trading Center