Compelling opportunities for dividends in Asian equities
Asian dividend equities have been unfairly overlooked in favour of stocks that fit into Asia’s ‘racy’ growth outlook narrative, according to Maple-Brown Abbott.
Speaking to Money Management, Geoff Bazzan, Maple-Brown Abbott head of Asia Pacific equities, said this sentiment formed the genesis of its Asian Dividend Growth Fund as the investment firm saw compelling opportunities for Asian companies to pay attractive and growing dividends.
“It's something that we think is a bit of an overlooked virtue of the Asian markets [as] people have historically been attracted to the racy growth outlook in Asia and the promise of strong returns on the back of rising income,” Bazzan said.
“But if you look at the underlying markets, and many of the companies in Asia, you've got some of the strongest balance sheets in the world, as measured by gearing or free cash flow, or net cash balance sheets.”
Bazzan said investors could benefit from Asia’s average payout ratio which sat around 40%, which he said was more modest than the rest of the world.
“So, with free cashflow rising as earnings recover, strong balance sheets and an increasing sense from a range of companies across the region, that management teams are becoming more receptive to rewarding shareholders and adopting more progressive sort of capital management policies, we think growing dividends is an inevitable outcome from that,” Bazzan said.
He said the firm was surprised by how well the new dividend fund had performed in the last six months.
According to Bazzan, Maple-Brown Abbott’s new fund which targeted defensive companies with stable and predictable cash flows, strong balance sheets and growing dividends would be attractive to investors in a market which would likely be characterised by high volatility.
“Since inception, the fund has delivered a modest return of 3.5%, but the broader index is down more than five over that period. So over 800 basis points of alpha since June,” he said.
AUTHOR
Liam Cormican
Recommended for you
Grant Hackett has been promoted from CEO of Generation Life to head up the wider Generation Development Group.
Tribeca Investment Partners has made a distribution hire from Australian Ethical in a newly-created role focused on the national intermediary market.
Asset managers may be urged to diversify their product ranges, but investment executives have warned any M&A deal should avoid simply filling gaps and instead consider long-term value creation.
Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equity firm.
