This week’s investment idea comes with a 9% yield, and a deep contract backlog to fund its payouts. More on that in a minute.

First, let me introduce you to the source of the recommendation — Elliott Gue.#-ad_banner-#

If the name rings a bell, there’s good reason.

The stock market strategist has appeared on CNBC and Bloomberg TV, and has been quoted in Barron’s, Forbes and the Washington Post. Elliott’s expertise and track record of success have also made him a sought-after speaker at investing conferences hosted by the American Association of Individual Investors (AAII) and others.

Elliott is one of the most widely followed and respected analysts in the United States, with particular expertise in the international markets.

And now he’s the newest member of StreetAuthority’s stable of investment experts.

Starting with the January issue of High-Yield International, Elliott’s in charge. It’s a good match.

The mission of High-Yield International is to bring readers the highest-yielding, fastest-growing — and safest — investments outside the United States, carrying on a tradition of delivering market-beating returns.

And in meeting that challenge, Elliott has years of experience with international investing to draw upon.

Elliott earned his bachelor’s and master’s degrees from the University of London. In the early 2000s, Elliott was associate editor of an international investing-focused newsletter called Market Meridians.

In 2006, he co-authored a book entitled “The Silk Road to Riches: Investing in Asia’s Newfound Prosperity,” which focused on the growth in emerging markets.

One of his first international high-yield picks was global drinks giant Diageo (NYSE: DEO), which at the time yielded about 4%. From the end of February 2002 through the end of November, that stock was up about 260% including dividends, far outpacing the 59% gain in the S&P 500 over the same time period. (Diageo has also been a top performer in High-Yield International’s “Reliable Income” portfolio since February 2009.)

Elliott also has an affinity for the international energy markets (which themselves are great fodder for yield-focused investors). He launched the highly acclaimed Energy Strategist newsletter in March 2005. Three years later, the official program of the 2008 G-8 Summit in Tokyo referred to Elliott as “the world’s leading energy strategist.”

Elliott’s transition to High-Yield International will be a smooth one, due in part to the fact that his predecessor isn’t going anywhere.

StreetAuthority co-founder Paul Tracy — an investing expert in his own right — took the helm at High-Yield International two years ago. At present, 93% of the holdings in the advisory’s two model portfolios are showing positive returns, with a hefty majority beating the S&P 500 by sound margins.

But Paul became a victim of his own success. During the same two-year period, StreetAuthority — the company Paul still actively manages — was growing at a frenetic pace. StreetAuthority’s paid subscriber base doubled, and global readership increased by hundreds of thousands.

Paul increasingly realized it was necessary to devote more of his time to managing that growth, along with several other major initiatives at the company — a decision that became easier when Elliott became available.

I sat down with StreetAuthority’s newest analyst this week and asked him to share with Insider readers his perspective. And, not to worry — I haven’t forgotten about that 9%-yielder I mentioned at the start of today’s issue…

Bob: You seem to eat, sleep and breathe international investing. What is your investment process?

Elliott: I generally have a top-down approach to investing. That means I start by assessing the global economic outlook and market trends underway in key countries and regions. I keep an eye on the economic data that’s released each trading day and monitor key political and economic policy changes. I then drill down further to look for industry groups and individual names that stand to benefit most from those trends.

For example, the Japanese economy is currently mired in recession and the country’s widely-watched benchmark index, the Nikkei 225, underperformed the S&P 500 for most of 2012.

But in mid-October Shinzo Abe, the leader of the Liberal Democratic Party (LDP), promised to increase government spending and push the nation’s central bank to adopt an inflation target of 2% if the LDP returned to power. Abe advocated the use of unconventional monetary policy such as additional quantitative easing and, potentially, negative interest rates to end deflation in Japan.

After that announcement the Nikkei has soared — since the end of October alone the Nikkei is up nearly 8%, outperforming the S&P’s paltry 2.7% return. After Abe’s landslide victory on December 16, I see the new government enacting plenty of policies that will be bullish for Japanese stocks in the new year.

Another example is Europe. European stocks have underperformed stocks in the United States for nearly three years due to the ongoing financial crisis in countries like Greece, Portugal, Italy and Spain.

But in September, the European Central Bank (ECB) announced a plan to buy bonds issued by troubled EU countries to drive down borrowing costs. The result: A dramatic outperformance for European stocks and a rising euro that’s pushed up returns. Europe also looks likely to emerge from its recession by the middle of 2013.

I will be examining some of the best positioned income stocks in EU for the January issue of High-Yield International. But don’t worry, they all trade on U.S. stock exchanges.

Bob: Where do you see the most opportunities for income investors in the coming year?

Elliott: Now is the time to be focused on investing in foreign markets. The U.S. fiscal cliff has created significant uncertainty for the economy in the first half of next year.

While some sort of deal to avert the fiscal cliff is eventually likely, any agreement will probably involve some spending reductions and tax hikes that will tend to slow down the U.S. economy. That means some of the best opportunities to buy high-yield stocks lie outside the United States.

For example, the European central bank’s efforts to bring down borrowing costs in countries such as Italy and Spain is starting to bear fruit. Recent economic data shows signs of improvement in Europe’s largest economies, and stocks in the EU are starting to outperform their U.S. counterparts. Moreover, just as in the United States, many larger EU companies are multinationals that generate the majority of their sales outside the continent. Some of these firms have been unfairly punished simply because they happen to be headquartered in Rome or Paris.

China will also be an interesting investment story in 2013. The Chinese economy has slowed. However, much of the slowdown reflects the Chinese government’s efforts to reduce inflation and cool down speculation in the domestic property market. But with Chinese inflation well under the government’s targets, China has cut interest rates, reduced reserve requirements and stepped up spending on infrastructure to shore up growth.

These efforts are already beginning to pay off as recent economic data out of the world’s second-largest economy has improved over the past three months. Recent manufacturing surveys, for example, suggest growth will rebound to around 8% in 2013. This is good news for Chinese firms but it’s even better news for companies in countries like Australia that are important suppliers of raw materials such as iron ore, coal and oil to the Chinese market.

Bob: What’s your top high-yield international recommendation right now?

Elliott: One of my current favorites is Seadrill (NYSE: SDRL). Seadrill is a contract drilling firm that owns a fleet of 66 rigs used for drilling oil and gas offshore. Seadrill’s fleet consists of 24 drillships and semisubmersible rigs used for drilling deepwater plays, 21 jackup rigs used for drilling in shallow water and 21 tender rigs used to conduct drilling from fixed or floating offshore platforms. Demand for deepwater drilling rigs has been robust over the past two years as major energy producers ramp up their activity in response to higher oil prices.

In addition, exploration success in regions including offshore Brazil, West Africa, the Gulf of Mexico and East Africa have encouraged further drilling activity and have led to a shortage of deepwater rigs, particularly those capable of handling depths of 10,000 feet or more. As a result, the dayrates for contract drillers has risen to as much as $650,000 per day for the most capable rigs, from around $450,000 per day in late 2010.

The market for jackup and tender rigs is also beginning to tighten. In particular, the market for premium deep water jackups capable of drilling in harsh environments such as the North Sea is now 95% utilized, meaning that virtually all rigs are currently drilling under a contract.

Seadrill contracts most of its rigs under longer-term deals that allow it to lock in fixed dayrates and generate a reliable stream of cash flows to pay dividends. Currently, the stock pays a dividend of 85 cents per quarter, equivalent to a yield of 9%. And with several new rigs currently under construction due to be delivered and placed under contract during the next few years, there’s upside to those dividends over time.

And, since Seadrill is incorporated in Bermuda, there are no withholding taxes for U.S.-based investors. I’d be a buyer at any price under $45.

[Note: Elliott’s addition to High-Yield International can’t be overstated. I can’t think of an analyst more prepared to take over what has become StreetAuthority’s best-performing advisory (more than 90% of the portfolio holdings are showing a gain).

What Elliott will have is a tailwind. International stocks tend to pay higher yields than their U.S. counterparts. Consider this: Out of the 155 profitable companies that pay yields more than 12%, only 22 of them are located in the United States. That means more than 86% of the world’s high yield opportunities are located overseas.

You can learn more about this phenomenon — including the full list of 22 U.S. stocks paying 12% — by following this link.]