WHEN THE LOON SOARS

above the eagle, it's time to do some portfolio re-jiggering.

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There are, of course, ways for U.S. investors to make a buck in the current weak-dollar environment, and some of the smartest don't require an understanding of complex foreign-exchange trades.

Take, for instance, U.S.-based multinationals. Shares of big domestic companies with substantial operations abroad benefit from a weak dollar when those profits earned in yen, euros and pounds are converted back into greenbacks. Look at names like Boeing and DuPont. As a bonus, large caps also tend to pay dividends, albeit in devalued dollars, and better weather economic turmoil.

According to a Sept. 24 research note from Richard Bernstein, Merrill Lynch's chief investment strategist, this trade is unlikely to disappear soon because "monetary and fiscal policy makers in Washington are showing little interest in the dollar's declining status as a reserve currency." In other words, don't hold your breath waiting for Uncle Sam to rescue the dollar.

Another weak-dollar strategy that's easy to execute involves investing in foreign companies that pay dividends. Not only are foreign companies yielding more income than domestic ones right now, but the payouts are in more valuable currencies. Deutsche Bank, for example, is yielding 5.0%, while France Telecom is yielding 4.2%.

"If you're looking for income, you get a lot more in the international markets," says Jeremy Schwartz, director of research at Wisdom Tree Investments. The average dividend yield for the S&P 500 stock index is about 1.8%, he says, while the Morgan Stanley Capital International EAFE index, comprised of stocks from 21 developed markets in Europe, Australasia and Far East, comes in around 2.8%. Wisdom Tree's own international DEFA index nets an annual yield of 3.8%, he says. "It's the best way of capturing that income, in our opinion."

Thanks to mutual funds and ETFs it's easier than ever to invest in dividend-paying foreign companies, many of which that don't even list their shares in the U.S. Professional portfolio management also allows managers to execute strategies to minimize potentially hefty overseas tax bills.

Wisdom Tree has several exchange-traded funds aimed at international dividend producers. Among the broadest reaching is the WisdomTree DEFA High-Yielding Equity fund, up 12% year to date. PowerShares, another ETF family, offers the International Dividend Achievers Portfolio, which similarly takes a broad approach to foreign income. Like DTH it's up about 12% for the year, but it yields a more attractive 2.5%, vs. 0.4% for the WisdomTree ETF. The apparent gap in dividend yields is due to the fact that many foreign stocks only pay dividends once a year, and the Wisdom Tree ETF had only been offered for a few months before the end of 2006, says Schwartz. In a full year, its yield will more closely mirror the broad index.

Josh Peters, editor of Morningstar's Dividend Investor newsletter, says foreign dividends should be part of a long-term strategy, not just a short-term response to a weak dollar, though he admits overseas yields are in the sweet spot now. "When you translate those dividends back into dollars, they're going to be much larger," he says. "The same goes for those share prices the difference is you don't have to sell any of them to see the appreciation."

That's not lost on mutual-fund companies, which are setting up foreign dividend offerings, though they're more expensive than ETFs. The Allianz NFJ International Value fund, for example, charges a front-end load and has an expense ratio of 1.46%, more than twice the PowerShares ETF's 0.6% expense ratio. Still, it's up 28% year to date. The fund also offers a no-load share class ( that has slightly lower returns. As we've said earlier, though, long-term investors can make load funds pay off. The Cullen International High Dividend fundis up 22% for the year to date, but has a smaller yield at 1.67%.

James Harries, a London-based portfolio manager whose Dreyfus Premier Global Equity Income fund is set to debut this month, says the world economy is in the process of readjusting. It's no longer U.S.-based, credit driven and financially engineered, so he's underweighting U.S. stocks and concentrating on Asia and Brazil.

Specific geographic markets aren't the focus for Will Browne, a partner at Tweedy Browne, which debuted its Tweedy Browne Worldwide High Yield Dividend fund last month. The portfolio, primarily made up of large-cap stocks from around the globe, has tacked on about 2% since inception.

"We're coming at this from the point of view that we're going to get solid dividends in euros, not that we have a view on the euro," Browne says.