NEW YORK (TheStreet) -- On Wednesday, when it was announced that the U.S. gross domestic product fell 2.9% during the first quarter, the Dow Jones Industrial Average and Standard & Poor's 500 Index rose, and stocks such as Apple (AAPL - Get Report) and Google (GOOG - Get Report) cruised near 52-week highs.
Those who fear a that there's a disconnect between the stock market and the U.S. economy may want to look at the London Stock Exchange. There are three reasons to consider investing in publicly traded companies on that exchange.
Reason No. 1 is that there are many excellent companies listed on the LSE, especially small caps. Take, for example, Audioboom Group (LON: BOOM), which owns Audioboo, a rapidly growing Web site and app that lets users share audio files.
The second and third reasons is that the LSE offers a lower price and a higher dividend yield on average than U.S. stocks.
The FTSE 100, the blue-chip index of the 100 companies with the largest market capitalizations listed on the LSE, is trading at a price-to-earnings ratio of 14.1 with an average dividend yield of 3.4%. By contrast, the S&P 500 Index has an average P/E ratio of 19.6 with a dividend yield of about 1.8%.
Many major British companies such as British Airways (BAIRY) and BAE Systems (BAESY) trade in the U.S. on the OTC Bulletin Board, an electronic trading service. But for many other British companies, you have to buy the stock on the London exchange. That isn't hard.
Charles Schwab (SCHW - Get Report), for instance, offers the Schwab Global Account. With that, Schwab clients can trade online with U.S. dollars in foreign markets through the local currencies that are converted by those affiliated with the brokerage. Schwab charges a commission of at least $100 for this service, along with a currency conversion fee.
The top brokers for international trading as rated by StockBrokers.com are ETrade (ETFC - Get Report), Firstrade Securities, Interactive Brokers (IBKR - Get Report), MB Trading, OptionsHouse and Questrade, a Canadian discount broker.
It is very difficult for an individual American investor to open a foreign account, and so trading through ETrade, Schwab or another domestic broker is the most feasible way to buy shares on a foreign exchange.
At the time of publication, the author had no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.