While historically, global income funds had limited exposure to Asia, in recent years the situation has changed, Kames Capital's Robin Black says. There are two financials among his five top picks.
Firstly, Asia continues to rise as a percentage of the world’s indices, reflecting the fact that the majority of the world’s population lives there and the economies are growing faster than the rest of the world. Secondly, Asian companies are now more liquid and are returning more cash to shareholders, making the region more suitable for income funds.
Robin Black (pictured below), support manager on the Kames Global Equity Income Fund, notes the dividend yield of 2.6 percent in the Asia Pacific region is higher than the average global yield of 2.4 percent, and is far in excess of the U.S. market, which yields just 1.9 percent. «Aside from the yields being higher, the dividends are also growing faster. This is partially due to a change in attitudes, but it also reflects the cash generative qualities of some of Asia’s more successful businesses,» Black added.
He looks for profitable companies with safe balance sheets, sustainable cash flow, and a willingness to return excess cash to shareholders. «We already have a higher proportion of the fund invested in Asia (excluding Japan) than we do in Europe (excluding U.K.), and the region will inevitably continue to grow in importance for income investors.» Below, Black identifies five standout stocks which offer attractive yields to investors in excess of the U.S. market.
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