Reaching for Dividends in Asia

You would think buying the highest yielding stocks in the world’s fastest growing countries would be a no brainer. Yet, you hardly ever find decent recommendations in this area. So after spending a few dozen hours scouring the investment universe, I came up with the short list below.

Some of these have already had good moves in this yield starved world. But it is still a good exercise to undergo on an otherwise slow noose day. And you never know, we might actually get a dip in global equity markets someday that will give you a chance to get in.

Seaspan Corporation (SSW)
is the world’s leading independent owner and manager of containerships. The Hong Kong based company has been fairly resilient in wake of the financial crisis in the United States and Europe. Annual fixed-rate shipping contracts have allowed the company to stay afloat at a time when consumer spending in the West has decreased significantly. Their recent investment in new building contracts for 10,000 tonne fuel-efficient SAVER design shipping vessels and the purchase of 4,600 tonne TEU class second-hand vessels are expected to save the company millions in fuel and shipping costs.

Seaspan offers common shares trade on the New York Stock Exchange under the ticket (SSW) as well as 9.5% series C cumulative redeemable perpetual preferred shares under (SSW C). The company has a market capitalization of $1.25 billion and generates revenue of $642.21 million. Its forward P/E ratio is 18.40 and PEG ratio is 2.26. It has a solid Price/Sales of 1.94 and a Price/Book ratio of 1.13. Seaspan has a dividend yield of 5.10%. With an historic 5-year dividend average of 8.5%, future economic uncertainly may mean a rebound to higher yields. The stock is relatively stable with a previous close at $19.91.

SSW 1-13-13

Chunghwa Telecom (CHT) is the largest telecommunications company in Taiwan. It is the largest service provider in the country and it is one of the biggest revenue earners in the Asian telecom industry. They also operate in several south-east Asian countries as well as China and Japan. The once government owned company has steadily become privatized. As of 2005, the government’s ownership was reduced to 50%.

The company has a market capitalization of $24.65 billion, generates revenues in an amount of $7.52 billion, and a net income of $1.37 billion. Its P/E ratio is 18.06 and forward price to earnings ratio is 19.38. Its Price/Sales is 3.25 and its Price/Book ratio is 2.0. Chunghwa Telecom has a year over year earnings growth of 23.31% which is expected to increase in the coming years. The stock’s dividend Yield is currently at 4.5% with a historic payout ratio of 78%. They company has paid dividends since 2010 and expects steady dividend payment in the future.

CHT 2-13-13

Malayan Banking BHD (MLYBY) is the largest financial services provide in Malaysia. They operate over 2,200 branches in 19 different countries and have a customer base of over 22 million. Malayan Banking BHD has done an excellent job investing in new growth opportunities while remaining a relatively conservative institution. Within the past several years, they have expanded domestically as well as internationally increasing the number of “Maybanker” employees to 45,000.

The company has a market capitalization of $23.09 billion, generates revenues of $5.10 billion and a net income of $1.81 billion. Its Price/Sales is 4.47 and its Price/Book ratio is 1.88. The company has a profit margin of 35.54% and a quarterly earnings growth of 13%. The stock’s trailing annual dividend yield is 7.6%.

MSCI Singapore Small Cap Fund (EWSS) is my final recommendation regarding Asian high yield dividend stocks. This small cap ETF index is largely comprised of financials (mainly real estate), industrials, consumer discretionary, and information technology companies. Suntec Reit, Sats Ltd., Venture Corp Ltd., and the Singapore Post Ltd. are its top holdings. Investing in this ETF will offer you great exposure to Asian growth stocks.

The index has next assets of $5.93 million, a P/E ratio of 17.84, and a price to book of 2.44. The ETF’s total returns are at 42.18% since its inception last year with a 12-month yield of 16% according to iShares. In mid-December the ETF faced a substantial drop due to its large dividend payout of $5.63 a share. The ETF pays out a dividend yield of a whopping 20.37%. This ETF is indeed high risk, but the financial stability of Singapore makes it a worthy investment.

EWSS 2-13-13