Where to find income in emerging markets

Traditionally, emerging markets have been all about growth. For investors wanting income, they've not been the obvious place to look. But that's all changing, says Cris Sholto Heaton. Here, he picks some of the most promising income stocks to buy now.

If your aim is to get a decent income from your stock portfolio, emerging markets (EMs) aren't the obvious place to look. After all, everyone knows that EMs are a growth investment a bet that these economies will carry on developing successfully and expanding their middle class of new consumers. There are no dividends to be found in Asia or South America; all corporate profits need to be ploughed back into new investments.

At least, that's the most common view of how EMs fit into an income strategy they simply don't. But it's completely wrong. While many EM companies don't pay dividends, there are plenty that do. And these companies can bring a lot to your income portfolio, as a small number of investors and funds are realising. With careful selection, it's possible to find firms that offer yields of around 5% and good growth prospects on top of that.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.