Asia is poised to drive global economic growth and is expected to account for more than half of the world’s GDP growth by 2025. There are major demographic dividends in Asia yet to be fully realised, led by giants such as China and India, while dynamic Southeast Asian economies, including Indonesia and Thailand, are also growing rapidly.
The focus on dividends is increasing across corporate Asia: 50% of the Asia-Pacific ex-Japan region is now yielding more than 2.5%. We believe the risk of dividend cuts is low in Asia owing to robust earnings and strong balance sheets, which provide good support for growing dividends.
We look for high-quality and dividend-paying companies in Asia that operate in growing industries and have a sustainable competitive advantage. We are actively investing in the future of AI and see real potential winners in the Asian technology hardware and semiconductor supply chain names.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Taiwan’s chip champion
TSMC (Taipei: 2330), the fund’s largest holding, is a global leader in producing semiconductors that are key building blocks for supporting the use of AI. Over the past few decades it has secured a sizeable advantage when it comes to production. It leads the global market and has built relationships with key customers.
It would be difficult for potential rivals to enter the market as they would need to spend huge amounts to replicate TSMC’s production system. Demand for its products, moreover, is strong. TSMC can therefore generate robust free cash flows. This helps support growing dividends, and the group’s shareholders have enjoyed good capital and dividend growth to date.
Taiwan-based Sunonwealth (Taipei: 2421) makes cooling fans for data centres. It supplies clients in industries such as IT, automotive electronics and network communication. A niche player, Sunonwealth is a preferred partner for customised cooling solutions, which enhances its market position.
It has also developed the first-ever MagLev motor fan, the world’s smallest and thinnest magnetic levitation motor fan, showcasing its innovation. As AI technology becomes more complex, the need for advanced cooling solutions grows. This makes Sunonwealth a vital part of the AI supply chain.
The company’s strong balance sheet and cash flows have historically supported a healthy dividend payout and an attractive yield.
Accton (Taipei: 2345) is a Taiwanese firm that makes high-speed networking switches for US heavyweights such as Amazon and Facebook, as well as others, including HP, Nokia, and Ericsson. The company boasts a strong research and development edge, a broad product range and a solid record of over 30 years.
The business also has high barriers to entry, deterring rivals. This is due to complex technical designs, close relationships with high-profile, established companies, long qualification times and cost competitiveness driven by the advantages of scale.
It has not only diversified its key customer base beyond Amazon (it now has Intel and Meta on its books) but has also extended the range of its switch business, which now focuses on AI accelerators too. Accton’s consistent improvement in profitability underpins its ability to deliver steady income growth over the long term.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
Hargreaves Lansdown slashes fees for ISA and SIPP investors - how does it compare to other providers?Hargreaves Lansdown, the UK’s biggest investment platform, has dropped its fees by 40%, to their lowest ever level, for certain customers. Is it a good deal, and how does it compare to other providers?
-
BP's 'long, painful decline' – and why next year could be even tougherOpinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
-
BP's 'long, painful decline' – and why next year could be even tougher
Opinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global marketsOpinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
-
The star small and mid-cap stocks income investors have overlookedOpinion Thomas Moore, senior investment director, Aberdeen, highlights three company stocks as he shares where he would put his money
-
Falling revenues and mounting debt spell trouble for Jumia TechnologiesStruggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
-
Chemring Group: an explosive investment opportunity in defenceEuropean states are raising their military spending, and Chemring Group looks well placed to profit
-
Next reports £1 billion in annual profits for the first time – what's next for the retailer?Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
-
Best of British bargains: cash in on undervalued companies in the UK stock marketOpinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
-
Building firm Keller presents low debt and ample scope for growthGeotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
