Dividend investing in Asia ex has beaten growth investing over 20 years — Yet, most investors still focus more on growth and capital appreciation than income. Of the two, income is more secure than capital returns. The total return for Asia ex in the last decade has been a mere 6% p.a. in US$ terms, 8% over 20 years and 10% over 30 years. Surely there must be stocks globally that can beat the total return over the last decade in dividends alone.
Investors globally like either bonds or GEMS — There is no interest in developed market equities. It is either the perceived safety of bonds or the lure of growth. We have been able to identify 150 stocks globally (US$ 1bn > market cap) with a dividend yield in excess of 5%. If we assume average earnings growth of 3% p.a., a constant payout and a median exit multiple of 15x in 10 years time, many stocks will beat Asia’s 6% total return seen over the last decade or the 8% seen over the last 2 decades.
Even with a 5% dividend hurdle rate, 22% of stocks are from Asia ex — Throw in Australia and that number rises to 32%. As a single entity, Europe has the most stocks in our list, 33%. Nor are they all boring utilities: 20% are financials, 13% industrials, 12% energy-related and another 9% are tech companies. And many of them are global in reach. In other words, bring dividends and compounding together and you have the eighth wonder of the world.
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