The Asia Pacific region is normally highlighted by investors looking for access to Japan or Australasia and to diversify their portfolios with holdings that can benefit from exposure to the nearby emerging markets.
But for more and more investors, the region is also becoming synonymous with income.
Figures from the latest Henderson Global Dividend Index in August show that dividends from companies within the Asia Pacific region rose 10.7 per cent to approximately $38.4bn (£23.5bn) in the second quarter of 2014.
The majority of this figure, about $20.6bn, came from Hong Kong businesses, with just $9.1bn coming from Australia, which may surprise some investors. South Korea added a further $5.5bn, while Singapore delivered the smallest amount in the region at $3.5bn.
But while Hong Kong dominates the region in terms of dividend payouts, the report notes: “There were big special dividends from Hong Kong’s Cheung Kong and Hutchison Whampoa, together worth $5.9bn.
“Excluding special dividends, total Asia Pacific dividend payouts fell 5 per cent, though 1.6 percentage points of this was due to falling currencies, and another 6 percentage points were due to changes in the index.”
Meanwhile, Australia, which accounted for just less than a quarter of the total, recorded a 2.4 per cent increase in dividends in spite of a $1bn negative contribution from the lower Australian dollar. The report suggests this implies “constant currency growth continues to look better than its regional peers”.
The other major country in the region is of course Japan, which has seen a surge in popularity from investors following the introduction of ‘Abenomics’, but has it paid off in terms of dividend payouts?
Figures from the Henderson Global Dividend Index report suggest that for the second quarter of 2014 at least, the answer is yes.
Dividend payouts in Japan rose 18.5 per cent year on year to reach a total of $25.2bn, which the report notes is the largest individual quarter on record.
That said, it also points to the difficulties Japanese companies face in relation to the weaker yen, with the currency hitting a six-year low against the US dollar in early September.
The report states: “In the last 18 months, the fall in the yen has wiped $8.5bn off Japanese dividends. This effect is now dissipating as the yen has stabilised.
“Currency effects deducted just 4.5 per cent from the growth rate [compared with a 17.6 per cent deduction in the second quarter of 2013] allowing growth to show through.
“On a constant currency basis, the increase in dividends was 23 per cent year on year, with 2 per cent coming from index changes and only a very small contribution from special dividends.”
It noted that within Japan, consumer stocks were among the best dividend payers, with Toyota Motor paying out roughly $3.4bn, which is $1.2bn more than the previous year, while Japan Tobacco also paid a higher dividend on a greater share count.
As we enter the final quarter of the year, the Asia Pacific region is perhaps unexpectedly one of the more stable areas of the world, certainly in terms of the way geopolitical and macro tensions could affect dividend payouts.
