Now here’s a powerful foreign dividend payer!

Last week, I talked about a long-time dividend recommendation of mine … one that embodied many of the characteristics I think make conservative income stocks such strong wealth builders.

Today, I want to talk about another textbook dividend play — only this one summarizes nearly everything I love about FOREIGN income shares.

It’s a company that I first discussed here in Money and Markets last August as one of the very first investments I was recommending for my own dad’s income portfolio.

At the time I didn’t name it because that wouldn’t have been fair to my dad or my other paying subscribers. But I don’t mind revealing it now since it has already produced a very solid return in the last 10 months …

In Fact, This Foreign Utility Has Beaten the Market
By 37 Percent Since I First Recommended It Last July!

The company’s name is National Grid Utility, and when I blindly mentioned this U.K.-based power provider last year it had already handed my own dad a 6.3 percent return in his first six days of ownership.

As I went on to explain, dad’s return from just this one position was already enough to quadruple the income he would receive from his entire $100,000 nest egg sitting in a money market fund for an entire year.

Of course, as of this past Friday he is now sitting on a total return of 31.7 percent from the same position — 30 TIMES what his entire $100,000 would have earned him sitting in cash through this coming August.

“Okay,” you’re probably thinking, “but what about the rest of his positions?” I’ll have more on that in a moment.

First, let’s stick with this single investment in National Grid.

Most of dad’s gain — 29.1 percent to be exact — has come from pure capital appreciation … which is pretty amazing because the S&P 500 has only gained 21.2 percent over the same period!

In other words, this position has outperformed the market by 7.9 percentage points or 37 percent …

Even more amazing is the fact that this particular company is a very conservative utility … and as I first reported a couple weeks ago, utilities have been one of the worst performing sectors so far this year!

If that doesn’t prove that careful stock selection — even in the most “boring” sectors — can produce superior results, I don’t know what would.

But Again, Much of National Grid’s Strong Performance
Can Be Attributed to the Fact that It’s a FOREIGN Dividend Payer …

While dad has only collected one dividend from this company so far, I expect future payments to boost his overall return quite substantially.

Reason: This company only pays twice a year, and its next indicated payment should be very healthy.

Moreover, as I’ve mentioned before, the beauty of buying foreign dividend stocks is that you can benefit from any negative moves in the U.S. dollar — both via inherent moves in the share price plus dividend payments that represent more dollars once translated from the company’s home currency.

Remember, even though you are going through a U.S. exchange, when you buy a stock like National Grid you are essentially purchasing a foreign company. As such, everything related to your holding is originally priced in some foreign currency … the British pound, in this case.

Therefore, if the pound strengthens against the dollar, you get what I like to call a “currency kicker.” Obviously, the opposite can also be true if the dollar rises against the pound. So far, however, the currency relationship here has worked in our favor. Plus, I think it’s important to diversify your portfolio into other economies anyway … since the overall effect will be a greater level of overall safety.

Now, am I saying National Grid is the best foreign stock to buy today? Hardly. In fact, while I continue to like it as a long-term holding and think there is plenty of upside still ahead, I have not been telling my subscribers to make new purchases at this point.

But as I said about Altria last week, this company demonstrates what to look for in foreign income stocks:

1. It’s a conservative, high-quality company with a solid business that does well in good times and bad.
2. It has a great dividend history.
3. Its current yield is well above average.
4. It was being undervalued by the market when I recommended it.
5. And its home currency looked likely to strengthen against the U.S. dollar.

So if you have yet to add any high-quality foreign dividend shares to your income portfolio, I suggest you get out there and start looking for a couple now!

Speaking of which, here’s a quick look at how the individual positions in my Dad’s Income Portfolio have been performing:

As you can see, we’re doing pretty darn well while staying very conservative. We’ve been slowly building up our individual stock positions … keeping a very healthy dose of cash … and waiting for other opportunities to present themselves.

Meanwhile, in addition to the positions above, we’ve already closed out two other trades with booked total returns (including commissions) of 32.5 percent and 38.4 percent, respectively!

So again, it really is possible to get far better income right now than you’d be receiving from the traditional sources … it just takes a little knowledge and some careful planning.

Best wishes,

Nilus

P.S. For more information on these individual investments, I encourage you to take a risk-free trial to my Income Superstars newsletter today. Heck, it’s only $69 for a full year!