As US stocks yo-yo up and down and America’s financial crisis continues to unfold, savvy investors are looking further afield for profit opportunities.

DailyWealth’s Tom Dyson reckons he’s found a great buying opportunity in Taiwan. Its economy and stock markets are in a ditch because the government controls the flow of money in and out of the country. This prevents China from taking over Taiwan’s economy.

It means Taiwanese companies have plenty of cash on their books… And according to Tom, it makes them “excellent dividend payers.”

As Tom explains:

While they keep Chinese businesses from infiltrating Taiwan’s economy, these [money inflow and outflow] regulations make it very hard for Taiwanese companies to send their capital out of Taiwan… or to borrow money in currencies besides Taiwan dollars. Taiwan companies can’t get credit overseas, because the government won’t let them use their Taiwan assets as collateral. And any Taiwan companies that do have operations overseas will do anything in their power to avoid bringing the capital they generate back to Taiwan… because they know it’ll get stuck once it gets here.

These rules mean Taiwan companies are loaded with cash. I studied the balance sheets of Taiwan’s 10 largest companies. These companies have total cash balances of $40 billion and only $9 billion in total long-term debt.

Taiwan companies make excellent dividend payers. For one thing, the government hates seeing cash sitting around on balance sheets out of its reach. So it levies a special 10% tax rate on companies who pile up cash for no reason. This tax makes sure companies either use their cash to grow Taiwan’s economy or pay it out to shareholders, where it generates income tax revenue for the government.

There’s another reason Taiwan’s companies dish out cash to shareholders. Cash-rich companies make attractive takeover targets. The predator can grab the cash and get the business for much less than it’s worth. Taiwan’s companies distribute their cash to dissuade predators…

Taiwan is a mature economy. There just aren’t many opportunities for these companies to make big investments in Taiwan. So I know dividend payments are going to increase in the future… unless Taiwan’s government deregulates and allows Taiwanese companies to use their cash on overseas investments. If this happens, Taiwan’s stock prices will jump anyway. Either way, shareholders win.

Source: Why We Can’t Lose Buying These Cash-Rich Divided Payers