Investors should seek income from multiple sources and there are compelling opportunities within Asian REITs and Asian dividends, this was stated in the latest article by Katerina Irwan, Portfolio Manager, and Bonnie Chan, Portfolio Manager, Eastspring Investments
The article outlined the benefits of including Asian REITs and dividends in an investor’s portfolio, what investors should look out for when doing careful active selection to raise yield, and the importance of seeking income from multiple sources.
The article goes on to say that Asia appears well-placed in an income portfolio given its large universe of high dividend-paying equities versus other regions.
On Asia dividends, the article said that dividends can be another building block in an income portfolio. “Historically, dividends are a relatively stable source of income due to their information content. Companies often prefer to keep dividends steady as a dividend cut could signal earnings or cash-flow problems, “they added.
The article said that evidence from both developed and emerging market equities shows that earnings have historically increased in the year of dividend initiation as well as in the following years. The initiation of a regular cash dividend has also been accompanied by capital gains4.
In selecting dividend-paying equities, investors should assess that companies have sensible capital management policies that are appropriate to the stage of their business cycle and development.
This, it said would increase the sustainability of their dividend pay-outs. “While we like steady yielders – companies that make high and steady pay-outs from recurrent income, we are also on the lookout for companies that have the potential to grow their dividends,” it said.
On the dynamics of Asian real estate, the article said that it has changed due to the pandemic, but there are still exciting growth segments to invest in.
The article said that changes in the usage of retail and office space are giving these segments new leases of life. In addition, as countries re-open borders and ease their safe distancing measures, hotels and malls are likely to benefit.