High-dividend stocks in Asia? You bet

May 29, 2010 - PRLog -- High dividend yields are showing up in some unexpected places.

If you think anything like I did just a scant few months ago, you wouldn't dream of looking to Asian stocks for high dividend yields. Most likely, you think of them like I did, resembling the technology sector: lots of growth but no yield.

Well, I was wrong. And if you still think like I did, you're missing an increasingly important source of high dividend yields. (By the way, technology stocks pay dividends these days, too. Check out Intel (INTC, news, msgs) to see what I mean.)

Here's the data from the Matthews Asia Dividend Fund (MAPIX) that opened my eyes:

And the Asian yield story looks like it has a way to run. In China, for example, total dividend payments grew to $73 billion in 2008 from just $8 billion in 1998, according to a Dec. 31 report from the Matthews China Dividend Fund (MCDFX). And $57 billion of the $73 billion in dividends paid out in 2008 came from companies that went public after 1998.

Even recently public companies in China, it seems from the data, are paying good dividends.

Available, yes, but reliable?
Why haven't dividend investors stocked up on these higher Asia yields?

A couple of reasons, I think.

First, investors are fixated on China and other Asian economies as growth stories. We're focused on buying growth of 20%, 30%, 40% or more a year. Why bother looking at dividends?

Second, it's awfully hard to figure out many of these dividend stories. Information on the companies is hard to get; the corporate structures are often so convoluted that it's difficult to tell what the information means once you get it. And Asian companies often pay out dividends on schedules and in formats that seem very, well, foreign to developed-market investors, who are used to regular and regularly announced quarterly dividend payments.

There's good reason that the Matthews Asia Funds have launched dividend funds for Asia (2006) and China (2009). A professional manager with the ability to buy and sell on local markets that are effectively closed to individual investors more than earns his keep in this part of the global stock market.

But that doesn't mean you can't add some Asian dividend stocks to your income portfolio -- either instead of buying a mutual fund or in addition to owning fund shares -- as a way to overweight a particular Asian country or sector in your dividend portfolio.

My first Asian dividend stock is Singapore's Keppel (KPELY, news, msgs). The company's biggest business is building offshore oil rigs. So far in 2010, the company has announced $1.65 billion in orders that include a wellhead platform for Brazilian oil company Petrobras (PBR, news, msgs) and a jackup rig for Saudi Aramco.

Keppel's infrastructure and property segments will account for an estimated 26% and 14% of revenue, respectively, in 2010, according to OCBC Investment Research. Keppel's infrastructure business includes a fast-growing cooling-systems maker with contracts in China, the Middle East and the United Kingdom. A wholly owned subsidiary, Keppel Integrated Engineering, is targeting what it calls the green infrastructure business with assets that include two waste-to-energy incinerator plants and a water processing plant.

Then there's the property business. The company is building a development called Reflections at Keppel Bay and another, Resorts World, at Sentosa, a resort island in Singapore. Also in Singapore is the company's Marina Bay Financial Center project, which is just nearing completion of Phase 1.

All this is complex enough, but things really get too complicated for me when it comes to figuring dividends. In 2008, according to the Matthews Asia Funds, Keppel was among the most generous payers of dividends in Singapore, giving out $385 million. The company hadn't yet set a dividend payout for 2009 before announcing this wrinkle: Keppel Integrated Engineering is contributing much of its environmental assets to a trust called K-Green Trust that will list in Singapore. The company will pay a "dividend in specie" of approximately 50.5% of the total number of trust units held directly by Keppel. This dividend will be distributed to shareholders.

Any idea what that dividend is worth? I'd love to be able to figure it out, but from here, I can't tell. And it's hard for me to recommend a dividend stock when I can't tell what the dividend is. (I'll keep working on it, though.)


"Based on consensus estimates, the projected dividend yield for 2010 of the MSCI AC Asia Pacific Index of 2.5% exceeds the 2.0% expected of the MSCI U.S. Index," the fund's managers wrote in a Dec. 31 report. In other words, Asian stocks out-yield their U.S. counterparts. By Jim Jubak, MSN.Com.
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