The U.S. is playing a leading role as global dividends rise this year, and “global” is the operative word in that statement. In other words, equity income investors shouldn’t gloss over payout opportunities in markets outside the U.S.
Asia is a region worth considering, and the SmartETFs Asia Pacific Dividend Builder ETF (ADIV) is an example of an exchange traded fund that delivers investors the goods on Asia-Pacific dividends. The actively managed ADIV focuses on dividend opportunities in the region, excluding Japan.
That’s not necessarily a drag for investors because Japan is a relatively new entrant to the Asia-Pacific dividend conversation, and ADIV reflects some of the more established opportunities in the region, including Australia. Dividends down under are bouncing back from cuts endured in 2020, and there are signs of payout stability among high-yielding Aussie banks.
“In November, all eyes will again turn to the earnings season for Australian banks. Based on the Q3 FY2022 trading updates, we expect the banks to maintain a steady payout trend in short term and flat amounts compared with the interim dividends. For NAB, WBC and ANZ, we are expecting them to pay AUD 0.73, AUD 0.61 and AUD 0.72 per share for the upcoming dividends,” according to IHS Markit.
As of August 31, Australian equities accounted for 11% of ADIV’s weight, making that the ETF’s third-largest geographic exposure behind China and Taiwan. ADIV allocates 18% of its weight to commercial bank equities.
Unbeknownst to many U.S. investors, dividends are meaningful with Asia-Pacific equities and provide many of the same benefits of domestic dividends. For example, broad baskets of dividend-payers in this region usually sport higher yields, lower volatility, and some outperformance potential relative to traditional equity gauges.
“Top attractive Asia Pacific dividend stocks selected in February 2022 outperformed Asia Pacific benchmark indices (Dow Jones Islamic Market Asia/Pacific Index and MSCI AC Asia Pacific Index) in the February and June-August periods. The gap is widening as Asia Pacific equity markets slide deeper,” added Markit.
The bulk of the research firm’s top dividend ideas in the Asia-Pacific region hail from China, Japan, Hong Kong, South Korea, and Taiwan. As noted above, ADIV doesn’t hold Japanese stocks, but the ETF devotes 62% of its weight to the other countries.
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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.