In decade where even the slightest annual gain was welcomed, it's no surprise that investors are looking to investments that offer above-average dividend yields. When it comes to bonds, there is a fear that rising interest rates and a rebound in equities could cancel out any annual income generated.
So where should investors turn to find above-average dividends without the risk of the bond market bubble bursting? The answer has been solid, large cap U.S. stocks that pay dividend yields much higher than the 2% that is currently the yield on the 10-year Treasury bond. (For related reading, see An Inside Look At ETF Construction.)

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International Twist
Investors have been pouring money into the utilities, health care and consumer staple sectors due to their low volatility and above-average yields. I agree with this approach for a portion of the portfolio, however the strategy often overlooks international stocks.

Due to the lack of information on stocks based overseas and that do not trade on U.S. stock exchanges; the best approach to this niche area is the Global X SuperDividend ETF (ARCA:SDIV). The ETF has one-third of its assets invested in the U.S., followed by 23% in Australia, 9% in the U.K. and 7% in Canada. A total of five continents are included in the ETF that has 100 individual stocks in the portfolio.

The index the ETF follows attempts to track the performance of 100 equally weighted companies that rank as the highest dividend stocks in the world. The current 30-day SEC yield is 8.67%, one of the highest available for the individual ETF investor. The annual expense ratio is 0.79%.

The Holdings
The beauty of the ETF is not only the geographical diversification, but also the equal weighting. The largest holding makes up only 1.4% of the entire portfolio and the top ten holdings account for 13% of the allocation.

The number two holding is Philip Morris (NYSE:PM), the international tobacco company that distributes its products to over 100 countries around the globe, not including the U.S. The stock pays a 4.1% dividend and trades with a PEG ratio of 1.25. The tobacco stocks have pulled back recently, but remain solid long-term investments for willing buyers. Another tobacco company, Vector Group (NYSE:VGR), distributes its cigarettes in the U.S. under brand names that are viewed as generic brands. The stock pays a hefty 9.2% dividend.

Telecom Corp of New Zealand (NYSE:NZT) is the only other stock in the top-ten holdings that trades on a major U.S. stock exchange. The lofty 12% annual dividend yield has been attracting investors for years. The company provides a plethora of telecom services in New Zealand and Australia, and has over 1 million subscribers. The stock has underperformed its peers, even with the dividend yield, therefore investors must be careful not to be persuaded by the eye-popping 12% yield.

The Bottom Line
The ETF is currently trading at the best level in three months as the U.S. market continues to gain momentum. An entry in the low $20's for long-term investors appears to be the best strategy as of today. Even if SDIV is able to move sideways all year, a return of almost 9% based on the current yield is more than enough for most investors. (For more, see How To Pick The Best ETF.)

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

At the time of writing, Matthew McCall did not own shares in any of the companies mentioned in this article.

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