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As the Dow continues to hit new highs, investors are faced with the question of where to put new money to work. I like to look for the red-headed step child that no one wants. We all know the U.S. recovery is gaining traction, while Asia has been booming with China leading the way; Japan is looking to end over 20 years of deflation and help the nation's exporters, and South America and Africa are a little too risky for my taste as emerging economies.

That really only leaves Europe. Still it's hard to find anyone really bullish on Europe. Europe will recover eventually. I just don't know if it's this year or next or the year after that. Well what should investors do while they wait? The answer lies in blue chip European dividend payers. Collecting dividends while waiting on a recovery is a solid plan.

1. Vodafone Group PLC (VOD), Dividend Yield: 3.70%

Vodafone Group PLC is based in the United Kingdom and provides mobile services to approximately 407 million customers. Vodafone has a market cap of $137.42 billion and is currently trading at $27.68. This telecom company also has an operating margin of 13.44% and a forward P/E of 10.94. What many people don't know is that Vodafone owns 45% of Verizon Wireless. There lies the hidden value in the stock. So much so that Greenlight Capital's David Einhorn recently increased his stake in the company (check out Einhorn's other picks). Vodafone is due to get an $8.5 billion dividend from Verizon that management said it will use for share repurchases. I always like when a company buys back stock. It thinks its stock is cheap and a good use of its own cash. There has also been speculation that Vodafone may sell its 45% stake in Verizon Wireless or spin off its stake in Verizon. Either one would boost the value of Vodafone's shares (read more in Einhorn's investor letter).

The market has weighed on Vodafone thinking that the company is too European centric. The weakness in Europe has been a lag on the company's share price. Vodafone does have room to grow in its core European market. As the company upgrades its network, more subscribers will be switching to smartphones. Currently, smartphones account for less than 50% of its subscriber base. Besides Einhorn, Tudor Investment has also increased its stake in the company. According to SEC filings, billionaire Paul Tudor Jones increased his stake in the company by 817% last quarter. If Einhorn and Tudor are buying, maybe we should too.

2. Royal Dutch Shell plc (RDS.B), Dividend Yield: 5.30%

It's really tough to ignore a oil supermajor trading at $68.08 paying a $3.44 dividend. That's the case with Shell Oil. The company has yearly revenues of $467 billion and a mega market cap of $214.65 billion. Shell has a book value of $59.78 per share making the stock incredibly cheap. Shell has one of the strongest balance sheets among the major integrated oil companies. The company has invested wisely in its projects and its reserves have a resource life of 58 years. The company's dividend rate is only 40% of yearly earnings, so the company has room to increase the dividend and fund investments. Shell recently announced that it repurchased 920,000 Class B shares (see why Royal Dutch beats out Exxon).

3. Unilever plc (UL), Dividend Yield: 3.20%

Unilever is a European consumer goods company that owns over 400 brands such as Ben & Jerry's, Hellmann's, Dove, Lipton, Closeup, St Ives and Vaseline. The company has a market cap of $115.96 billion, an operating margin of 13.75%, and a return on equity of 32.30%. The stock is currently trading at $40.95, just shy of the 52-week high of $41.06.

Unilever is in a very strong position. Fourteen of its brands each generated sales of over $1 billion. It is in the consumer staples category that people have to buy its products. The company gets over half its sales from emerging markets. Thus, even though many of Unilever's operations are in Europe, it is not totally dependent on Europe for revenues (check out how Unilever stacks up against P&G).

4. Siemens (SI), Dividend Yield: 2.70%

Siemens is Europe's version of GE. The stock is currently trading at $108.87, giving the company a market cap of $91.75 billion. Siemens has a forward P/E of 11.34 and is considered cheap having a PEG ration of 0.41. The company has an operating margin of 9.01% and a return on equity of 16.02%. Book value per share is $46.13.

Last quarter Bill Gates became a shareholder in Siemens. The stock is now his 23rd largest in his multi-billion dollar portfolio. Billionaires Ken Fisher and Jim Simons of Renaissance Technologies also have a big stake in Siemens. Considering that the company is the market leader in many of its operations, it looks like these billionaires are making the right move owning Siemens stock and you should too.

5. Banco Santandar, S.A. (SAN), Dividend Yield: 8.30%

The last of our five European dividend stocks is Banco Santandar. This is the most controversial of our bets on Europe in that Banco Santandar is a Spanish banking stock and the problems in Europe lie in its financial sector. But with an 8.30% dividend yield, I think Santandar is worth the risk and has the most upside.

The main reason why I advocate a postion in Banco Santandar is that I believe the worst of Europe's problems are behind. If the bank has been able to weather the storm so far, it should continue to perform well. In other words, if the company didn't go under at the height of the financial crisis, look for the company to achieve growth as Europe recovers.

The company's financials also support the thesis to own. The company's PEG ratio is an impressive 0.48, cheap by any standard. Banco Santandar also has a forward P/E of 9.44. Chairman Botin has publicly stated that the company has the financial strength to insure the healthy dividend payout.

Time To Look At Europe?

As I have stated and shown with these 5 stocks, I feel that now is the time for investors to start investing in Europe. Take the long approach and collect dividends while we wait. I think we'll be well rewarded down the road with this strategy.

Source: 5 Dividend Stocks From Across The Pond