Compelling opportunities for dividends in Asian equities

19 January 2022
| By Liam Cormican |
image
image
expand image

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.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 2 weeks ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 2 weeks ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 6 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

1 day 11 hours ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 4 days ago