Shareholder remuneration has historically been low on the list of priorities for companies in the region.
Asia-Pacific has not historically been a favourite place for income seekers to visit.
The reason why is because companies in the region are often in their growth phase, meaning reinvesting profits is often prioritised over paying dividends. However, even for mature companies, shareholder renumeration was often low on the list of company priorities.
Dated to the end of April 2019, dividends for the Asia-Pacific (excl. Japan) region grew by 220.8% since 2009. Growth over that period was almost twice as fast as the rest of the world’s combined 119.8%. US dividend growth, in contrast, was 181% over the decade.
In total, companies in Asia-Pacific paid their shareholders £1.5 trillion over the past decade. Ten years ago, dividends from the region were just £57.6bn, only slightly larger than the UK’s £50.1 billion.
The region’s strong dividend performance continued in 2019, with first quarter growth from the region coming in at 8.3% in headline terms. The headline rate was slightly below that of the rest of the world, which came in at 9.6%.
However, that was the result of one-off special dividends being lower year-on-year, particularly in China and Hong Kong, and some exchange-rate effects. Once that was stripped out, underlying dividend growth for the region continued its trend of being above average at 11.3%, three percentage points higher than the rest of the world.
Over the past year, the biggest contributors to dividend growth in the region have been South Korea, China and Singapore.
The worst performers in the region were New Zealand and Malaysia. Both countries saw lower dividend payouts compared to the year before.
Commenting on the growth of Asia-Pacific dividend payouts, Mike Kerley, portfolio manager of Henderson Far East Income noted: “Rapid dividend growth comes on top as companies across Asia-Pacific are increasingly adopting a culture of dividend paying.
“This is partly because many companies are becoming very large and ever more mature, both features which tend to lead to higher dividend payments anyway as operations become strongly cash generative. And it partly reflects a changing corporate attitude that increasingly recognises the importance of returning capital to shareholders.”