The top 20 dividend paying companies across the globe – as revealed by the Janus Henderson Global Dividend Index this week – are an eclectic mix of banking, telecoms and technology giants. However, the stand-out theme is that the Asia-Pacific region is vastly over-represented, both in terms of numbers and in terms of growth.
Within the top 20 dividend payers, there are 11 companies in the Asia Pacific region - including China Mobile, Taiwan Semiconductor Manufacturing, Hon Hair Precesion Industry, MTR Corporation and Power Asset Holdings. Their dividend growth has outstripped the rest of world by some margin, seeing a leap of 36.2% with records broken in Hong Kong, Australia and Taiwan. The nearest country to matching this growth was, slightly surprisingly, the UK.
Yes, this represents a seasonal peak and yes, there are some special dividends within that, but it is a clear example of the super-sized opportunities within the region. US companies remain the biggest payers in absolute terms, but Asian companies are catching up. In Q3, US dividends were $109.9bn, those of China, Australia, Hong Kong and Taiwan combined were $90.4bn. This should tell you as an investor where the market is going.
The super-sized opportunities were also evident on China’s recent Single’s Day, so-called because it was the day lonely bachelor students bought themselves presents, but now the world’s largest retail event. Shoppers spent more than $25bn. Just to put that in context, it is now nearly 4x larger than Black Friday and Cyber Monday. Amazon – a master in its own domain – must surely be watching Alibaba with some envy.
The opportunities in Asia, and in China in particular, are simply bigger, and in some cases, monumentally bigger. Ecommerce in China is now worth double that of the US. It overtook the US in 2015 to become the largest e-commerce market in the world and is on track to be worth US$840 billion in 2021, with the US a paltry US$485 billion.
The opportunities are different to those found elsewhere in the world. Roderick Snell, manager of the Baillie Gifford Pacific fund, says: “Chinese shoppers are pursuing a different path. Bricks and mortar shopping infrastructure isn’t happening with consumers moving straight to online shopping. The technology companies are arguably far more inventive – TenCent and WeChat, for example. WeChat is a whole ecosystem, with full functionality. People can have their salary paid directly into their WeChat account.”
This isn’t an isolated example. Snell describes an ‘explosion of creativity and innovation’ in the region that is still underestimated by the rest of the world. China currently exceeds the US and Europe combined in research and development spend. Four of the world’s top 10 start-ups were founded in China.
In Asia, as in elsewhere, exciting growth does not necessarily coincide with exciting dividends. The region very much has old and new economy stocks. However, for investors it is encouraging that a dividend culture is well and truly emerging, and if it is well-established among the larger state- owned enterprises, it is likely to spread slowly to newer companies.
There are other messages investors can draw from this month’s Global Dividend Index. It is also a message not to neglect technology. The total dividend haul from technology has gone from $141.3bn in Q3 2011, to $319bn in Q3 2017. And those industries that haven’t moved? Oil, as and energy – which has dipped from $112.2bn to $104.2bn over the same period, and telecoms, which has dipped from $130.9bn to $119.9bn.
This month’s dividend index showed a progressive shift, from West to East, and in the West, from old industries to new. Investors need to make sure they are on the right side of the trend.