Look to Asia for Higher Dividend Income
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Due to the low interest rate policies and programs of the Federal Reserve, many investors are turning to dividend paying stocks to provide the returns that Treasury bonds no longer do. At recent auctions, Treasury Bond yields have hit record lows. While United States Government debt is at artificially anemic levels, the dividend income provided by many Asian stocks is very healthy.
At present, the mean dividend income from a member company of the Standard & Poor's 500 Index is around 2%. For Asian dividend paying stocks, it is about 3%. In addition, growth in the future greatly favors those firms doing business in Asia. Even during The Great Recession, the consumer class in emerging markets continued to expand, as it is expected to do in the future.
Perusahaan Perseroan PT Telekomunikasi Indonesia Tbk (NYSE: TLK) and its subsidiaries provide telecommunication and network services throughout Asia and the rest of the world from its headquarters in Indonesia. On a quarterly basis, sales growth is up by 10.18%. The profit margin for Perusahaan Perseroan PT Telekomunikasi Indonesia is 21.55% with an operating margin of 30.57% and a gross margin of 71.91%: all very healthy. At 3.75%, the dividend yield for Perusahaan Perseroan PT Telekomunikasi Indonesia is very healthy, too.
The dividend yield and profit margin are high too for Taiwan Semiconductor Manufacturing (NYSE: TSM), the "world's largest dedicated semiconductor foundry." As a dividend paying stock, Taiwan Semiconductor Manufacturing offers an above average yield of 3.92% with a profit margin of 31.48%. By contrast, the profit margin for Intel Corporation is only 23.16%. Taiwan Semiconductor has a very positive price-to-earnings growth ratio of 0.98 so there is a bullish future for the company, and its dividend component.
Phone companies are noted for healthy dividend yields and SK Telecom (NYSE: SKM), which provides wireless communications in South Korea, is certainly one. Dividend income from SK Telecom comes at a 6.13% rate with a payout ratio of 48%, which is below the historic mean dividend payout ratio for a S&P 500 company of more than 50%. SK Telecom also has a profit margin of 14.13%. This dividend income apparatus is much more favorable than that for AT&T, which has a yield of 5.05%, a payout ratio of 249.25%, and a profit margin of 3.44%.
Like phone companies, many Big Oil stocks also provide strong dividend income streams for shareholders. CNOOC Ltd (NYSE: CEO) is Big Oil (market cap of $86 billion) with a big dividend, 3.53%. As the dividend payout ratio is only 27.65%, there is ample cash flow for dividend growth or stock buyback programs in the future to enhance returns for shareholders. Based in Hong Kong, CNOONC Ltd has a profit margin of 29.16%. Earnings-per-share growth this year is up by more than 29%. Exxon Mobil only pays a 2.71% dividend with a profit margin of 8.28%.
Down more than 15% for the year, Canon (NYSE: CAJ) offers a high dividend yield along with capital gains when it rebounds. Now trading around $37.50 a share, the mean analyst target price for Canon for the next year is $50.85. On a quarterly basis, earnings-per-share growth is up by 14.15% for the Japanese photography equipment and supply maker. As there is only a minuscule short float of 0.09% for Canon with it so close to its 52-week low, there is defintely upside to the stock. The dividend income of 4.16% pays the shareholders for the time spent waiting for the stock price to recover.
Federal Reserve Chairman Ben Bernanke has stated that the low interest environment will be maintained until 2014. With Europe in a recession and economic growth feeble in the United States, low interest rates could be around long after that date. Looking to Asia for stocks with high dividend yields is an attractive way to counter the low interest rates offered in the United States and Europe that will remain will into the future.
jonathanyates13 has no positions in the stocks mentioned above. The Motley Fool owns shares of Telekomunikasi Indonesia (ADR). Motley Fool newsletter services recommend Telekomunikasi Indonesia (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
