Traditionally, Asian companies use less of their profits to pay dividends out. But for investors looking for dividend growth opportunities, funds such as the Guinness Atkinson SmartETFs Asia Pacific Dividend Builder (ADIV) offer tremendous dividend growth potential.
“Asia is one of the few areas of the world offering investors access to a decent dividend” said Mike Kerley, Janus Henderson Far East Income Fund Manager in an interview with the Daily Mail. Shortly after the ongoing pandemic first set in, dividend stocks took a big hit around the world, with U.K. income-focused stocks losing roughly 30% of their value. Asian dividends, meanwhile, only fell back 5%.
Though historically a challenging place to find dividends, the Asia Pacific market is becoming more and more critical to the global economy. The relatively low dividend baseline creates enormous upside for future growth, especially among quality companies with a track record of ticking their dividends up year after year.
Regulatory crackdowns in China coupled with ongoing reverberations from Evergrande have caused some investors to shy away, leading to depressed stock prices and value buy opportunities. ADIV also offsets its exposure to China with companies based in places like Taiwan, which has a tech-heavy economy that has made it a dividend growth champion in the region. Taiwan is uniquely positioned to pave the way for sustainable investing as its industry and economy are ripe for a relatively quick green transition, and the robust earnings of companies like Taiwan Semiconductor Manufacturing Co., Ltd (TSM) could make it an attractive market to investors seeking alternatives to China. ADIV has 3% of its holdings weighted in Tawain Semiconductor Manufacturing.
ADIV also features companies based out of India, including IT giant Tech Mahindra Limited. India’s economy has grown past its pre-pandemic size. With more and more of the country being vaccinated after a rough period of outbreak, the economy has been exploding. Many investors are seeing a sustained economic boom for the country on the horizon.
ADIV has an expense ratio of 0.78% and a dividend yield of 2.86%.
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