Investing in an increasingly volatile market — amid geopolitical risks, rising bond yields and macroeconomic uncertainty — is no mean feat. The unpredictability has led some analysts to reiterate their recommendation to buy dividend stocks. According to Morgan Stanley, the MSCI Asia Pacific ex-Japan High Dividend Index outperformed the MSCI Asia Pacific ex-Japan index in the first quarter of the year, albeit by only 0.58%. However, looking ahead they see more potential. “We note that the rising UST [U.S. Treasury] bond yields and market volatility in Asia/EM continued to favor Defensive Value style to outperform. The cautious investors’ sentiment also drives allocation toward Quality Dividend stocks,” the investment bank’s analysts wrote in an Apr. 9 note. “The market has been pricing out Fed rate cut expectations from March onward. ‘No landing’ and ‘sticky inflation’ narratives are on the rise again. These translate into a higher UST bond yields and particularly favoring dividend stocks to outperform.” For the Asia-Pacific ex-Japan region, the Wall Street bank produced a screen of what it called its “conviction list” of dividend stocks, using these criteria on a 12-month forward-looking basis: Likely to outperform the MSCI Asia Pacific ex-Japan High Dividend Index; Least likely to announce dividend cuts; Low risk of having dividend cuts, as rated by industry analysts; Market cap of over $2 billion. Here are 10 stocks that appeared on Morgan Stanley’s screen: A number of the stocks are China-based, including China Overseas Property Holdings , China Medical System Holdings and the Bank of China . The latter has a forward dividend yield of 8%, according to Morgan Stanley, comfortably higher than the average of 5.1% on the screen. The list also includes Taiwan-based Quanta Computer , with a consensus forward dividend yield of 3.5%. The bank says the electronics manufacturer has a growth story “powered by dual engines – AI servers and EVs” which should help to drive increased margins. — CNBC’s Michael Bloom contributed to this report.
Morgan Stanley has named its top global dividend stocks for this quarter
Apr 17, 2024
