Investors looking for a value play with dividend stocks would be wise to look across the Atlantic.

While there are attractive valuations and high yields to be found in other geographic regions, the macroeconomic picture still points toward European dividend funds. Although growth in the eurozone has slowed, easier credit and monetary conditions do not appear to point to recession there.

But in Japan, China and the emerging markets, the economic landscape looks mixed at best.

The U.S. remains in the mid-cycle phase and is a major driver of global expansion, but stocks are getting expensive with the forward price-to-earnings ratio on the S&P 500 Index at 19.3.

Meanwhile, the forward P/E on the MSCI EAFE Index is a reasonable 13.7, and you can find a host of dividends over 3%. This makes for a ripe environment for investors to consider adding one of the best European dividend funds to a diversified portfolio now.

Here are a pair of high-yielding dividend funds with the majority of holdings in Europe stocks:

Best European Dividend Funds: Federated International Strategic Value Dividend (IVFAX)

Trailing 12-Month Yield: 4.64%
SEC Yield: 3.75%

Federated International Strategic Value Dividend (IVFAX) is a standout foreign dividend fund whose portfolio is concentrated in large, value-oriented dividend stocks, with more than two-thirds of its holdings located in greater Europe. Top holdings include Unilever PLC (UL) and GlaxoSmithKline PLC (GSK).

Another impressive feature for some investors is the management’s buy-and-hold conviction, as evidenced by the low 14% turnover ratio. This helps keep expenses below average at 1.1% and increased potential for consistency in dividend payouts. However, the A shares do include a maximum 5.5% load charge.

The fund’s inception was just more than six years ago, but the five-year annualized return of 7.2% outperforms 80% of foreign large value category peers and its 1.3% year-to-date performance might seem small, but it beats 99% of category funds.

The minimum initial investment amount is $1,500.

Best European Dividend Funds: SPDR S&P International Dividend (DWX)

Trailing 12-Month Yield: 5.22%
SEC Yield: 5.28%

If you are looking for a high-yielding dividend stock fund but don’t mind taking above-average principal risk, you might consider an ETF such as the SPDR S&P International Dividend (DWX).

While the fund has historically held above the 5% yield range, the returns have been inconsistent, to say the least. The year-to-date price gain of 0.15% lands the fund in the top 1% of category peer performance, but the five-year return of 3.3% lands it at the bottom of the foreign large value group.

Regional exposure puts more than 50% of the DWX portfolio in Europe, with top holdings including AstraZeneca (AZN) and Royal Dutch Shell (RDS.A). But more than a third of holdings are Asian stocks — so this is less about the pure European exposure, and more about above-average yields as well as low cost. This indexed ETF charges a scant 0.45% in expenses.

As of this writing, Kent Thune did not hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.