In the hunt for ex-US dividends, income investors often focus on Europe, while Asia has steadily been climbing the ranks of payout potency and growth.
The actively managed SmartETFs Asia Pacific Dividend Builder ETF (ADIV) is a premier avenue for accessing quality dividend companies in Asia. Although ADIV excludes Japan, one of the faster-growing dividend markets in Asia, the fund still offers investors a vast reservoir of dividend growth potential. Take the case of Singapore, which recently lifted limits on bank dividends.
“The Monetary Authority of Singapore (MAS) said on Wednesday it was removing caps on dividends paid by locally incorporated banks and finance companies,” reports Reuters. “On Wednesday, the MAS said banks and finance companies had maintained strong capital adequacy ratios and continued to meet the credit needs of individuals and businesses, despite higher levels of provisioning made during the pandemic.”
The city-state accounts for 8% of ADIV’s weight, making it the fund’s sixth-largest geographic exposure. IHS Markit estimates Singapore bank dividends will rise to $5.1 billion this year, up from $3.6 billion in 2020.
Australia, which accounts for 11% of ADIV’s weight and is the ETF’s third-largest geographic exposure, has a rich dividend history and one that will be enhanced this year thanks to banks and commodities producers. After a spate of cuts last year due to the coronavirus crisis, Aussie dividends could return to pre-pandemic heights this year.
“Payments from firms on the S&P/ASX 200 Index may surge by about a third this year, returning close to 2019 levels, according to data compiled by Bloomberg. A rally in commodity prices and economic growth have helped Australia’s blue-chip firms accelerate payouts, even as some companies may be cautious on dividends amid delta-strain outbreaks,” reports Thuy Ong for Bloomberg.
As for South Korea, which represents 9% of the ADIV roster, dividends there are at multi-year highs with room for more growth.
China is the largest emerging markets dividend payer and the largest country weight in ADIV at 29%. Analysts are bullish on payout prospects at Chinese real estate and consumer staples companies, among other sectors.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.