Page 20 - DIY Investor Magazine | Issue 32

FIVE CHARTS SHOWING THE ATTRACTIONS OF ASIAN EQUITY INCOME
Asian shares offer a compelling proposition when it comes to investing for income.
By Richard Sennit, Fund Manager,
Schroder AsiaPacific Fund and Schroder Oriental Income Fund
Interest rates may be on the rise but investors searching for higher income will still want to consider the merits of dividend- paying shares. Income investors often look to UK shares. However, Asian equities also hold significant attractions for income investors, and can help provide diversification.
The chart below shows how dividend yields in the Pacific
ex Japan region are above those on offer in other non UK markets, and comfortably ahead of regions like the US. The dividend yield is the dividend per share, divided by the price per share.
Then we come onto the opportunity set for income investors in Asia. The chart below shows the percentage of companies in different regions with a dividend yield above 3%.
As we can see, around 50% of companies in Pacific ex Japan and in Europe fulfil that criteria. By contrast, the percentages in the US and Japan are much smaller (around 33% and 18% respectively).
Added to their higher yields, Asian companies are operating in a region that is forecast to enjoy higher economic growth than other parts of the world over the next five years, as the next chart shows.
You may argue that overall GDP growth has little to do with investment returns. But as an income investor I’m looking for companies which are able to grow their income and dividends over time. Given the choice, I’d rather be doing that in an environment of higher economic growth than lower growth.
DIY Investor Magazine · Feb 2022 20