In the late 1960’s, the central bank of Mexico was looking for ways to bring more American tourists — and their U.S. dollars — into the country.

Acapulco, on the Pacific side of the country, had already become a tourist mecca decades earlier. In the 1950’s it was a prime spot for Hollywood celebrities and millionaires. John Kennedy and Jackie even had their honeymoon there.

The central bank saw the opportunity and ordered a commission to study the feasibility of creating another tourism destination on the Caribbean side of Mexico. Eventually, the commission picked an isolated spot near the eastern tip of the Yucatan peninsula.

The spot was home to only a handful of residents and was covered in jungle. But it also boasted warm turquoise waters, white sand beaches, and a spit of land that jutted into the water, making it perfect for strip of hotels.

So in 1970, Mexico put its master plan in place to turn this unknown spot into a tourist haven. Of course, today we know this town as Cancun — which in 40 short years has become home to more than half a million residents and one of the most visited tourist destinations in the world.

I tell you this story because I’m trying to break some perceptions about Mexico. Right now, even though Mexico is practically in our backyard, most people sneer when the country is mentioned.

People see the headlines of the drug trade, corruption and illegal border crossings and shun any investment opportunities. But the rise of Cancun is a great example of the opportunities of investing in Mexico.

Don’t get me wrong, any investor needs to weigh the problems I mentioned, but at this point they appear to be outweighed by the opportunity.

As bad as the recession was for the United States, we had it easy compared to Mexico. Dependent on oil prices and exports to major U.S. industries, Mexico’s economy contracted -6.5% in 2009. But 2010 is turning out to be a strong year — even stronger than financial experts had predicted. In the first quarter, Mexico’s economy grew +4.3% versus a year ago.

In the first four months of 2010, Mexico’s exports rose +43.2% over last year’s performance. In the same time period, Mexico added 380,000 jobs — the country’s largest job creation in 20 years. April saw the amount of money sent home by Mexicans living abroad rise year-over-year for the first time in 17 months. Remittances are Mexico’s second-largest source of foreign income after oil exports.

Even Mexico’s beleaguered tourism sector is starting to show signs of a rebound. Last year tourism was crippled by the swine flu scare. And although it is still facing some hurdles due to the uptick in drug-related violence, tourism revenues were +6.6% higher in March 2010 than March 2009 (although that is a easy comparison given the March 2009 downturn in the U.S.).

Given the good news but poor headlines from Mexico, I think there is an opportunity. But what about income?

Action To Take –> For us income investors, high yields can be found with closed-end funds. There are a few funds with heavy interests in Mexico that also trade on the NYSE. (See below for a few details about one pick I found for my Daily Paycheck readers.)

The best news is that because of the dour headlines, many closed-end funds are trading at large discounts to their assets. And with share prices still being held down, yields on these funds have been inflated, making a great entry point for income investors.

And just think — you could reward yourself with a trip to Cancun with the dividends you earn.