The iShares MSCI Australia ETF (NYSEArca: EWA) lagged the S&P 500, the iShares MSCI New Zealand Capped ETF (NYSEArca: ENZL) and scores of other developed markets ETFs last year.

That despite the best efforts of the Reserve Bank of Australia, which has slashed borrowing rates by 225 basis points since late 2011. After an extended period of under-performance, Australian stocks may ready to bounce back, benefiting EWA and the WisdomTree Australia Dividend Fund (NYSEArca: AUSE) along the way. [Down Under Disappointment]

“Following the underperformance of Australia relative to global markets and its continued growth in dividends, Australia has now moved back to a position where it no longer looks overvalued on the basis of yield,” according to a Goldman Sachs note obtained by CNBC.

As global bond yields sank last year amid ongoing monetary easing by developed world central banks, investors flocked to markets with robust yields.

Although Australia’s benchmark rate of 2.5% is a record low for the country, it is among the highest in the developed world. That sent some Australian dividend stocks to lofty valuations, prompting concerns about the sustainability of dividends down under. AUSE has lost almost 11% over the past year.

In third quarter of 2013, Australia’s average payout ratio was 70%, more than double that of the S&P 500, prompting some analysts to remind investors that when Australia’s payout ratio tops 65%, slack equity performance usually follows. [Dangerous Dividends Down Under]