Of all S&P 500 stocks, 77% pay dividends. The median market cap is $11.4 billion, meaning just under 200 of those dividend-paying companies are large cap stocks. That's not a huge amount when you consider how many large caps exist worldwide. Investors interested in making investments in larger companies that pay dividends might want to consider stocks outside the United States. Here are four reasons to love the PowerShares International Dividend Achievers Portfolio (NYSE:PID).

IN PICTURES: 10 Reasons To Add ETFs To Your Portfolio

1. Higher Dividends Equals Higher Earnings Growth
Over the last century, 90% of the total return of U.S. stocks were from dividends, and it's this statistic that makes the two-year extension of the 15% dividend tax all the more important. Estimates peg the tax savings at $75 billion over two years. It's a significant sum indeed. Certainly, the extension makes ETFs like the PowerShares International Dividend Achievers Portfolio a lot more attractive.

However, forgetting this windfall for a second, the most important aspect of dividends is the fact that companies that pay higher dividends generally achieve higher earnings growth. It's counter-intuitive but critical to investment performance.

2. Global Diversification
U.S. stock markets represent approximately 32.8% of the world's total market capitalization. This means two-thirds of the world's equity markets are outside these borders. Investors can meet the international portion of their portfolios either by investing in American multinationals or buying large cap mutual funds or ETFs.

The PowerShares International Dividend Achievers Portfolio invests in American Depository Receipts, Global Depository Receipts and non-U.S. common stocks that have increased their annual dividend for five or more consecutive years. It's an international version of the dividend aristocrats. The United Kingdom and Canadian stocks represent 48% of the portfolio. Holdings include Canadian companies Rogers Communications (NYSE:RCI) and Telus (NYSE:TU) as well as British companies like British American Tobacco (NYSE:BTI) and Diageo (NYSE:DEO). It's a great group of global businesses.

3. Outperforms S&P 500
Over the last five years, the portfolio has outperformed both the S&P 500 and MSCI EAFE indexes by 107 and 201 basis points annually. Had you invested $10,000 in the portfolio in 2005, it would have been worth $12,137 by the end of 2010. This compares to $11,205 for the S&P 500. Six out of the top 10 countries represented in the portfolio are European, and its stocks have suffered more than most in the past three years making its performance nothing short of amazing. While past performance doesn't predict future returns, it's good to know international multinationals survived the global recession relatively unscathed.

4. Decent Yield
The average dividend yield for S&P 500 stocks in 2011 is projected to be 1.75%, approximately 90 basis points less than the ETF. It doesn't seem like a lot, but over 10 years it's an additional $1,000 in total return for every $10,000 invested. Combined with my first point about higher dividends equaling higher earnings growth, its yield is more than satisfactory.

The Bottom Line
Simplicity is the key to successful investing. For a net expense ratio of 0.57%, investors get 64 dividend-paying stocks and a sufficient amount of global diversification. Long term, you'll do just fine. (For more, see Why Dividends Matter.)

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Tickers in this Article: PID, RCI, TU, BTI, DEO

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