It is cold in Russia. So are investors’ feelings about the “R” in the now notorious BRIC acronym.

Russia is a chronically discounted emerging market. These days, Russian equities are so inexpensive that not only do stocks there trade at discounts to the broader emerging markets universe, but at discounts to their own long-term averages.

Investors have not been taking the bait on compelling emerging markets valuations, a song that has been sung many times over the past year. The proof is in the pudding. Cheap Russian stocks have not prevented the Market Vectors Russia ETF (NYSEArca: RSX) and the iShares MSCI Russia Capped ETF (NYSEArca: ERUS) as two of the five worst non-leveraged ETFs year-to-date. [No Central Bank Help for Russia ETFs]

Although it is not an invitation to snatch up Russia ETFs right now, interested income investors that can stomach the volatility should note Russian companies are at starting to provide more compensation in the form of dividends. That is more than can be said of some other emerging markets. [South Korea is no Dividend Destination]

Oil giant OAO Rosneft, “which pays out 25 percent of net income in dividends, will recommend raising payouts to 12.86 rubles a share from 8.05 rubles a year earlier, producing a 5.1 percent yield on today’s share prices, according to a presentation,” report Stephen Bierman and Elena Maznev for Bloomberg.

J.P. Morgan likes Russian oil names on the basis a weak ruble can help those stocks, saying of Rosneft “Rosneft’s negative EPS FX exposure turned out to be much less than we initially expected after TNK-BP’s takeover in 1Q13, and 2) the company’s valuation sensitivity to RUB/oil is the highest in the sector on the back of the highest financial leverage,” according to Barron’s.

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