While there is a threat Asian companies will emulate their U.S. peers and cut dividends this year, it should not distract serious investors from the huge dividend yields currently available in the region.
Current yields in the region are at their highest levels in almost two decades, offering more bargain opportunities than existed during the 1998 Asian financial crisis or the post 9/11 global downturn. Stock price levels have declined immensely causing yields to rise, though there is a threat of payouts being cut to limit unnecessary capital outflows. Current Asian yields stand at an average of 4.3%, beating 10-year U.S. treasuries by 2%.
My Opinion: While there is an extremely high chance of dividend payouts being cut, a move we are witnessing all over the world, Asian companies still offer great value to investors. Current market turmoil has not affected Asian financial corporations as badly as their U.S. peers, and industries like manufacturing and services, while currently affected, will prove to be resilient as they seek to replace U.S. clients with others.
Current yields are too high and will likely come down, however they still offer a great opportunity to value investors seeking to profit from high dividends and potentially strong capital gains.
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