Investors should head east for income growth

Dividend payouts are also on the up in Asia. Income investor should look to these two investment trusts to get a slice.

"It isn't just the sun that rises in the east", says Ian Cowie in The Sunday Times. Dividend payouts are also on the up. Asia was once characterised by stingy yields, says Daniel Leussink on Reuters. Yet the median percentage of company earnings paid out in dividends rose to 33% in Asia-Pacific at the end of last year, comparable to the 34% ratio in the US and above Europe's 27%.

Many companies in Asia have become more mature, so cash generation and distributions are on the rise, Mike Kerley of the Henderson Far East Income trust told Cowie. Dividend payments in the region have grown by 221% over the past decade, far greater than the global average of 120% and Britain's 89%. The top contributors to that growth have been South Korea, China and Singapore, adds Tom Bailey in Money Observer.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Volatile markets and the trade war mean that investors may not be able to count on capital growth, but that is less important than many think. As David Brett points out in City A.M., £1,000 invested in the FTSE 100 at the turn of the millennium would have returned just £204 by the end of 2017. But with dividends reinvested the total return would have been £1,193. That underlines the crucial role of dividend re-investment in driving long-term gains. Two Asian income trusts worth researching are Schroder Oriental Income (LSE: SOI) and Henderson Far East (LSE: HFEL).




Why investment trusts are the best vehicle for your money

Max King explains the advantages of investment trusts – sometimes called closed-ended funds – over their open-ended counterparts (or Oeics).
11 Feb 2020

Bullish investors return to emerging markets

The ink had barely dried on the US-China trade deal before the bulls began pouring into emerging markets.
27 Jan 2020

Investment trusts: the Cinderella of investment arrives at the ball

Investors should look beyond the market noise of a single year and examine the bigger picture. Max King explains what we can learn from 25 years of in…
8 Jan 2020
Investment strategy

Beware the hidden risks when investing in emerging markets

Emerging markets look cheap compared with developed countries, but earnings may be less trustworthy.
23 Dec 2019

Most Popular

Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

The euro’s slide against the US dollar looks set to continue

The euro has been in a bear market against the US dollar for two years now. And on a broader scale since 2008. A decline like that is telling us somet…
19 Feb 2020
UK Economy

Britain’s economy might spring a surprise on the doomsayers this year

The UK economy is looking pretty good – we’re more at risk of a boom than a bust, says John Stepek. Here’s why, and what it means for your portfolio.
20 Feb 2020

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020