There’s a long-standing argument between finance academics and investors.

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Most academics assert that the market is efficient and there is very little edge available for traders and short-term investors. When challenged with long-term success stories of traders who consistently beat the market, the academics say those individuals are presently the statistical outliers. In other words, they are simply lucky — just like the folks who win the lottery several times or consistently succeed at any game of “chance.”

I am fortunate to be married to a woman who holds a doctorate in finance and is a great resource when it comes to programming trading strategies and understanding market microstructure.

However, we are often at odds when it comes to the viability of active trading. I love to prove her ideas wrong by showing her papers by respected academics who take my side. I am certain she gets the same vicarious thrill when my market ideas are proven inaccurate.

The one thing my wife and I agree upon is the wisdom of long-term dividend investing. (In that respect, we’re also in agreement with regular readers of Amy Calistri’s Daily Paycheck advisory, which emphasizes the portfolio-growing power of dividends.)

My wife recently pointed me to academic research that adds support to the no-nonsense power of dividend stocks. This research zeroes in on non-U.S.-based small- to mid-cap dividend payers — and what it discovered is mind-blowing.

Heartland Advisors, investment advisor to the Heartland International Value Fund (Nasdaq: HINVX) in collaboration with the University of Wisconsin, will soon publish a paper asserting that international small- and mid-cap dividend-paying stocks significantly outperform their non-dividend paying counterparts.  

The results of the study are nothing short of amazing. They researched the rolling average 12-month returns from 1993 to 2013 for the universe of non-U.S. stocks with market caps between $100 million and $5 billion. The average rolling 12-month return for these stocks was just over a respectable 6% — but the highest dividend yielders returned 16.3% over the same time. It’s great to see academic-led research confirming what long-term dividend investors have known for years.

International stocks may lie outside many investors’ comfort zones — but in today’s global economy, the search for returns and yield often leads to foreign lands. While there are many unknowns with international stocks, that’s no reason to avoid them. One key to success in the markets is to step outside your comfort zone to embrace opportunities with high potential returns, wherever they may lie.  

One way to gain quick exposure to and earn high dividend-powered returns from international small-cap stocks is through the Wisdom Tree International Small Cap Dividend Fund ETF (NYSE: IDV). This exchange-traded fund is an ideal tool for gaining diversified access to the small-cap international dividend paying market. It has returned more than 20% this year and has a 12-month yield of just under 5%. (Here are the details of the ETF’s holdings, sectors and countries invested.)

Risks to Consider: All investing involves risk. While this ETF provides diversification, it is still tightly tied to the global economy. Always use stop-loss orders and position size properly when investing.

Action to Take –> I like IDV right now based on its technical picture. Shares have been in an uptrend until hitting resistance but have recently hit support in the 50-day moving average area. Buying now between $37 and $38 with stops at $33 and a 12-month target of $45 makes solid sense.

P.S. Having trouble finding high yields in today’s market? Then you need to know about “Hidden High-Yielders.” There’s a little-known quirk to some dividends that gives investors yields of 6.1%, 7.7%, 10% or higher. The secret won’t last long, so click here to check out our new report on these “Hidden High-Yielders” before everyone else finds out about them.