Despite investors' recent flight to quality over the last few weeks, the U.S. dollar has continued its decade-long slide downward. So far this year, the PowerShares DB US Dollar Index Bullish (NYSE:UUP), which tracks or trades the dollar to the long side, versus a basket of other currencies, has slumped over 10% within the last year. To protect against this slump, many advisors and analysts are suggesting that investors add a larger dose of international stocks to portfolios. What used to be a complicated and difficult process has been simplified by the recent exchange-traded fund (ETF) boom. Adding increased exposure to dividend-paying international firms can be done with one ticker.

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Why Foreign Dividends
For investors looking for higher dividend yields, firms overseas could be the answer to their prayers. Smaller foreign firms have traditionally held a more dividend-friendly culture over comparable American corporations, paying them to shareholders rather than keeping them as retained earnings. Average payout ratios for international corporations across all market caps tend to be in the 35-45% range. This compares to the average 25% for U.S. stocks. Some nations such as Australia have average payout ratios closer to 50%. This results in yields, on average, 1% higher for international indexes versus their U.S. counterparts. In addition, with more foreign equities paying dividends, foreign dividend-focused indexes tend to be better diversified across sectors.

Perhaps one of the more compelling reasons to add foreign dividend stocks is the dollar's general decline. As firms in Switzerland pay their dividends in Francs, those in Malaysia pay in Ringgits and Mexican stocks pay in Pesos, investors can benefit when those payouts are translated back into dollars. By selecting stocks of nations that have good long-term prospects, such as Canada, and are appreciating versus the greenback, investors can increase their dividends over the longer term.

Finally, with the planet becoming ever more connected, investors can be missing out on the general growth of the world's economy by focusing on just domestic firms. After all, some of the leaders in a variety of industries are found overseas. For example, English spirit maker Diageo's (NYSE:DEO) products are found in every bar and restaurant. This growing interconnectivity among economies means opportunities for income investors.

Gaining Exposure
With many advisors now looking to add increased exposure to international dividend stocks, Wall Street has answered the call. Breaking out a portfolio's passport has never been easier. Here are a few picks.

The SPDR S&P International Dividend (NYSE:DWX) and iShares Dow Jones International Select Dividend (NYSE:IDV) are two of the broadest funds within the sector and command the bulk of the assets. Both funds track similar indexes that focus on exchange-listed common stocks from around the world that offer high dividend yields and count Australia and the United Kingdom as their top country weightings. However, the iShares only includes developed market nations, while the SPDR includes some exposure to emerging markets. IDV yields 4.8% and DWX yields 5.9%.

For investors looking for more quality and less volatility from their international dividends, the PowerShares International Dividend Achievers ETF (NYSE:PID) could be the answer. This ETF tracks a basket of stocks that have increased their annual dividend payouts for five or more consecutive fiscal years and then weights them by dividend yield. This includes weightings to strong dividend payers like Shaw Communications (NYSE:SJR) and pipeline firm Enbridge (NYSE:ENB). The PowerShares fund currently yields 3.6%. Similarly, the WisdomTree International Large Cap Dividend (NYSE:DOL) weighs its holdings based on dividends paid as opposed to overall dividend yield.

Finally, for investors looking for more "spice" from their international dividend investments, emerging markets are quickly becoming a source for income and growth. As these markets have grown and developed, dividend-paying companies have become much more prevalent. Both the WisdomTree Emerging Markets Small-Cap Dividend (NYSE:DGS) and SPDR S&P Emerging Markets Dividend ETF (NYSE:EDIV) allow investors to tap into this trend.

The Bottom Line
As the dollar continues to sink, many financial advisors and investors are seeking safety in international dividend stocks. The ETF boom has made it easy for the average investor to add exposure to the asset class. The previously mentioned funds, along with the WisdomTree International Div ex-Financials (NYSE:DOO), make ideal solutions. (Dividend capture strategies provide an alternative investment approach to income-seeking investors. See How To Use The Dividend Capture Strategy.)

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