Finding The World's Highest Yields In a South Pacific Paradise

New Zealand is one of the world's most beautiful countries, full of rolling meadows, breathtaking mountain ranges and unspoiled shorelines that stretch from the tropics to the edge of the Antarctic region.

     With only four million citizens, it's a lovely place to travel if you love scenery but hate crowds.  And it's also a potentially gorgeous source of investment opportunities, especially if you like high-yield securities.  That's because the country boasts the world's highest-yielding stocks -- 8.5%, on average. 

That's not a typo.      With the average large-company stock in the U.S. yielding a puny 2.3%, it's a crime not to investigate New Zealand's market if you're in search of income.      And remember, that 8.5% figure is just the average -- many individual stocks in New Zealand are now dishing out yields of 10%, 12% . . . even 15% or more.      Why do New Zealand's stocks yield so much?      Partly because the country's tax laws create incentives for higher dividend payouts; partly because New Zealand's publicly traded companies want to attract foreign investors; and partly because of a quirk in New Zealand law.

     You see . . . New Zealand withholds 15% of dividend income paid to most non-resident shareholders, including those from the U.S.  But many companies boost their payout to foreign investors to make up for the withholding -- and the New Zealand government actually subsidizes them for doing so.  (Again, attracting foreign investors is a priority for this small, geographically remote country.)

     Meanwhile, U.S. investors can still retrieve the 15% withheld by simply requesting a foreign tax credit on your federal income-tax return.  The end result is a truly superior dividend yield for Americans investing in New Zealand's highest-yielding stocks.  Where else can you find companies that pay you extra just because you're an American?

     Investors are Enjoying +112.5% Capital Gains Too!

     Dividend-friendly New Zealand stocks are an even better deal than they appear, because in addition to paying the world's highest yields, they've also delivered major capital gains in recent years.

     These gains are being driven by strong economic growth, boosted by rising agricultural-commodity prices and New Zealand's relative proximity to fast-growing Asian economies, such as China, Taiwan and Singapore.

     Not surprisingly, New Zealand's stock market has clobbered the U.S. stock market by a significant margin this millennium . . . 

      Is the party over in New Zealand?  My prediction: The best is yet to come -- and that's especially true today, when New Zealand stocks have succumbed to some profit-taking, making them especially undervalued now.

     Long-term global population pressures are also strongly bullish for this naturally rich nation.  New Zealand single-handedly accounts for one-third of the world's dairy trade, and the global rise in the price of milk is showering windfall profits on the nation's dairy farmers.

      In fact, New Zealand's biggest dairy operation hiked its upcoming 2008 payout by +27% over 2007.  The money will be flowing like milk, first to New Zealand's farmers and then into the country's stock market.

     The country also has significant natural gas reserves, which help supply its own energy needs.  And much like its neighbor "down under" -- Australia -- New Zealand is benefiting from the general economic boom in Asia; unemployment recently stood at only 3.6%.

      Meanwhile, rock-solid New Zealand government bonds now pay 8.25% . . . and outside money continues to flow into the country to capture these attractive rates.  No wonder the Kiwi dollar just hit a 24-year high.

     Currency Gains Boost Your Returns

     So far in the 21st century, the "Kiwi" dollar has gained more than +50% vs. the U.S. dollar.  This has led to a sharp increase in the value of American investments in New Zealand, as well as the dividends paid by those investments.

     So while the New Zealand stock market has surged +112.5% since 2000, when you include the currency effect, the gains for American investors have been far greater -- totaling over +225%.

     Over the next year or two, I expect this trend to continue due to a variety of factors -- U.S. economic growth is slowing down, foreigners are pulling their money out of U.S. treasuries, and money is flowing into New Zealand in an effort to capture strong returns and relatively high interest rates.

     With all of these factors in mind, I believe the U.S. dollar will continue to fall versus the New Zealand dollar, leading to an ever-increasing stream of capital gains and dividends for U.S. investors.

     Capturing 10.3% Yields in New Zealand

     Several attractive Kiwi companies boast high yields, but the most interesting one today is one of the nation's most profitable companies; it's also a special situation with excellent total-return potential.

     In a recent issue of my premium newsletter -- High-Yield International -- I profiled one of my favorite high-yield picks in New Zealand -- a-stable, fast-growing utility that's paying an impressive 10.3% dividend yield.

     If you'd like to learn the name of this high-yielding Kiwi stock -- 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.

      Thanks for joining me on my search for today's highest-yielding securities!

-- Nick Lanyi
Editor
High-Yield International

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