As central banks around the world push interest rates near zero, investors are stepping up their search for assets to bring in stable income and maximize profits.
Many analysts said that while Asian companies are also under pressure from factory closures and reduced demand this year, their cash flow could help maintain dividend payments.
Citing Reuters, Mr. Jim McCafferty - head of Asian capital research of Japan in Nomura (Hong Kong, China) said that companies in Asia seem to pay more attention to the sustainability of withdrawals such as capital expenditures and dividends compared to companies in the West.
This could be due to the fact that Asia has experienced more crises than the West in recent years, added Jim McCafferty.
According to an analysis by Reuters, nearly 70 out of 600 top listed companies in Europe have cut or suspended dividends from February 24 to March 31. Not only that, 18 out of the total 100 leading companies in London have cut or delayed their dividends.
Last week, Goldman Sachs expected its S&P 500 dividend to fall 25% in 2020 as some major industries paying dividends were vulnerable to economic shocks from the pandemic.
However, Refinitiv data shows that over the past month, dividend payments by companies in Asia have been more modest than in other regions.
Sean Darby - an analyst at Jefferies Bank said that H stocks listed on the Hong Kong (China) or companies linked to the government provide a barrier for investors because they can easily receive bank loans while holding large sums of money from domestic trade franchises.
Sean Darby added that companies like China Mobile, road toll companies in China and insurance companies that provide dividends are guaranteed good valuations. In addition, last month, China Mobile committed to keeping a stable dividend for 2020.
According to Nomura's analysis, only 18% of the top 100 US non-financial firms have net cash flow, with outstanding cash, while the rate in the UK is 21%. On the other hand, 48% of Chinese/ kemical companies and 50% of Japanese companies are companies with net cash.
Along with that, Refinitiv data shows that the dividend flows of companies in Australia, Hong Kong and Singapore are among the highest in the world. Asia - Pacific has the highest free cash flow. Accordingly, these companies will keep enough money to serve investors looking for profits.
