Dividends4Life: Emerging Markets Dividend Stocks

Emerging Markets Dividend Stocks

Posted by D4L | Monday, November 15, 2010 | | 0 comments »

Investors have been attracted to emerging market equities for many years now due to their capital appreciation potential.Until recently not many emerging market stocks have been known for their dividends.However that paradigm is changing. Companies in developing countries are increasingly paying out a higher portion of their profits to investors in the form of dividends.

Some of the reasons for investing in emerging market dividend stocks include:

  • EM companies are changing their dividend policies to accommodate the demands of foreign investors who hold major stakes in these firms.
  • Low corporate debt levels, improved governance and rising earnings allow companies to sustain dividend payments.
  • Asian firms have raised their dividend payout ratios to attract foreign capital and the ratio now stands between 30% to 40%.
  • Some companies are changing from growth-focused businesses to mature operations with the ability to pay dividends.
  • Among emerging markets, countries such as Brazil, Taiwan, Turkey and China have the most developed dividend cultures while South Korea and others have lower dividend payout ratios.
  • Brazilian companies are legally obligated to pay out over 20% of their net profits in dividends.
  • The EM universe has a sufficient number of dividend paying stocks.
  • The dividend growth rate of emerging stocks may outpace that of developed stocks.
Source: TopForeignStocks.com

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