When investors look towards Asia, they generally do so from a growth point of view. After all, the region's exploding populations, expanding middle classes and conservative government accounting is helping spur new infrastructure investment and creating the consumers of tomorrow. Overall, the continents long term promise is great and investors that capitalize on this growth will be rewarded. However, given the market's recent uncertainty and global sell-off, many investors are worried about that growth in the short term. Luckily, Asia is more than a one-trick pony.

TUTORIAL: Economic Indicators To Know

Asian Dividend Stocks
Despite being viewed strictly as a capital gains engine for portfolios, Asia has historically been an income seekers dream. Asian equities have traditionally yielded between 75 to 100 basis points more than U.S. stocks. Currently, stocks of Asian companies outside of Japan have an average dividend yield of over 3%. What's more impressive is the dividend growth rates for these stocks. Data analyzed by Bloomberg found that Asian dividend growth outpaced both the United States and Europe on an annual basis. Dividends within the broad MSCI Asia Pacific Index rose at an average annual rate of 16% from 2002 to 2009. This compares with only a 6% annual dividend growth rate for the S&P 500. Dividends have accounted for more than half the total return of the MSCI Asia Pacific Index since 1987.

Value in Dividends
Dividend payers in the region are mispriced as investors have sought growth only, so these stocks represent an excellent value proposition. Since the currency crisis in the late 1990s, many Asian firms have clamped down on debt and have extremely healthy balance sheets. Also, Asian equities typically have a high degree of government or family ownership. These dividends are a perfect way to extract wealth from an investment or company. This propensity for higher dividend growth combined with higher GDP growth rates makes Asian equities a great buy during the turmoil.

Investors may have another reason to smile. While the U.S. dollar has been rising lately, the expected long-term decline in the greenback makes Asian dividends that much sweeter. As these dividends are paid in Bhatt, Yuan, Ringgits and Rupees, and then translated into dollars, investors can receive a higher payout as the dollar falls. These payments can ultimately help cushion the extra volatile nature of Asian markets.

Adding A Dose Asian Dividend Power
With the long term trends in Asia's favor, investors may want to consider adding an Asian dividend strategy to their portfolios. The WisdomTree Asia Pacific ex-Japan (Nasdaq:AXJL) follows a basket of 250 high yielding equities from across 12 different Asian countries. The dividend focused fund currently has a distribution yield of 5.74% and has returned just over 11% annually since its inception in 2006. In addition, the iShares MSCI Pacific ex-Japan (NYSE:EPP) as well as the ING Asia Pacific High Dividend (NYSE:IAE) make adding a broad swath of Asian dividend payers to a portfolio easy.

Although there has been some recent problems with Chinese reverse merger firms, these firms never paid dividends. While you can fake profits, handing out cold hard cash to investors is another matter. With that said, China remains an interesting place to look for dividends. Both China Life (NYSE: LFC) and China Mobile (NYSE:CHL) represent two plays on China's new found consumerism coupled with strong dividends.

Taiwan's technology prowess is well known, but it is equally as impressive as a dividend payer. The iShares MSCI Taiwan Index (NYSE:EWT) currently yields 2%, while individual firms such as Taiwan Semiconductor (NYSE:TSM) and Chunghwa Telecom (NYSE:CHT) yield 4.6% and 5.8%, respectively. Investors may want to consider the small nation in their search for dividends.

Bottom Line
When investors look towards Asia, they tend to focus on the growth aspects. While this growth is certainly a major consideration, equally as important is the regions focus on dividends. These strong high yields could be exactly what investors are looking for in emerging market exposure. Gaining access through funds like iShares MSCI Singapore (NYSE:EWS) or individual equities like Woori Finance (NYSE:WF) is easy. (For additional reading, take a look at Finding The Best Yields.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    The Top Vanguard Emerging Market ETF

    Learn why growth investors should consider investing in VWO's portfolio of emerging market stocks.
  2. Stock Analysis

    8 Solid Utility Stocks for a Bear Market

    If you're seeking modest appreciation, generous dividend payments and resiliency, consider these eight utility stocks.
  3. Investing Basics

    How to Pick the Best Muni Bonds and Muni Bond ETFs

    Municipal bonds are a good addition to a diversified portfolio as long as you choose correctly based on population and local economic trends.
  4. Stock Analysis

    Why Phillips 66 (PSX) is a Solid Long-Term Bet

    Here's why Phillips 66 will likely remain one of the world’s largest and most profitable companies for a long time to come.
  5. Mutual Funds & ETFs

    Top 3 Emerging Markets Bond Mutual Funds

    Discover detailed analysis of the top three mutual funds offering exposure to the emerging markets bonds, and learn about the suitability of these funds.
  6. Stock Analysis

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  7. Economics

    Keep an Eye on These Emerging Economies

    Emerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
  8. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  9. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  10. Investing Basics

    Top Tips for Diversifying with Exotic Currencies

    Is there an opportunity in exotic currencies right now, or are you safer sticking to the major ones?
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!