Schwartz said some investors have been leery of the dividends from Chinese banks, assuming that growing payouts are an avenue for masking problems with non-performing loans. He did say that Chinese banks are growing profits in such a way that they can keep up with their dividend obligations. Financial services is DEM’s largest sector at 25.8%. Energy is next at 21.2%.
While noting the emerging markets dividend story is still in the early going, Schwartz offered important advice for investors looking to capture income in the developing world.
“Dividends are a way for emerging markets companies to show corporate governance and highlight cash on hand,” he said. “A company’s dividend is an objective measure. It can’t be faked.”
DEM has a distribution yield of 5.95%, according to WisdomTree data. Taiwan, Brazil and South Africa round out the ETF’s top-five country weights.
WisdomTree Emerging Markets Equity Income Fund