Foreign-Stock Kickbacks

IN A ROCKY market, those dividend checks sure can seem appealing, whether they come from Brazil or Taiwan. At least that was our thinking in February, when our "Global Payouts" highlighted five stocks that had high dividends and good growth prospects. It's still early, but so far, those stocks are up 2 percent, compared with a 9 percent plunge for the Standard and Poor's 500 index, mostly thanks to those hefty payouts. The current thinking is that going global continues to be a wise play. "Some of these foreign companies just have better fundamentals right now," says Judith Saryan, manager of the Eaton Vance Dividend Builder fund.

Brazilian electric utility CPFL Energia (CPL) was our top performer, returning 16 percent. The company is profiting from a growing Brazilian middle class hungry for energy-dependent products like computers and home appliances. Edward Guinness, manager of the Guinness Atkinson Alternative Energy fund, expects the company to post 20 to 30 percent returns over the next few years.

Taiwan Semiconductor (TSM) has avoided the ugly fate of its rivals in the lethargic microchip sector by keeping a lid on costs. The stock has returned 9 percent. Scott Schluederberg, portfolio manager at Hardesty Capital Management, thinks the company could nearly double its dividend payout in two years.

French oil and gas company Total (TOT) cranked out a 5 percent return. Charlie Ober of T. Rowe Price's New Era fund expects the company's consistent performance to continue, thanks to new projects in Nigeria and Yemen.

But dividends or no dividends, our picks weren't perfect. Hungarian phone company Magyar Telekom (MTA) fell 4 percent, and only its dividend payout made it look that good. An internal investigation of some past company contracts doesn't threaten the overall company but has been a major distraction nevertheless. Hungary's teetering economy is not helping either. Consider cutting your losses.The real downer in the group, however, was AXA (AXA). The French insurance giant has fallen 18 percent because of investor worries about the credit crunch and AXA's ability to sell variable annuities in a volatile stock market. There is hope, though. JPMorgan analyst Michael Huttner says the recent pressure on earnings will subside as the market stabilizes.