Sustainable dividends from publicly listed Japanese companies set to move even higher.Billionaire investor Warren Buffett, through his holding company Berkshire Hathaway, is now moving funds out of mainland China and Taiwan and into Japanese companies across a broad range of industries. The migration in large part reflects increasing political risk as the United States and China square off on the global stage.
Like most countries, Japan needs a strong global economy – driven by the U.S. and, yes, China – to show sustained growth. Still the land of the rising sun has the advantage of being a veteran democracy with a solid banking system and top international currency. All that bodes well for the economy’s future prospects and those of its leading companies.
Note that Canadian investors can easily access Japanese stocks through American depositary receipts traded on the New York Stock Exchange. ADRs let you hold virtually the same shares traded on the Tokyo exchange. We searched for Japanese companies with strong growth prospects. We then pinpointed dividend-payers before applying our TSI Dividend Sustainability Rating System. It awards points to a stock based on key factors:two points if it has raised the payment in the past five years;one point for operating in non-cyclical industries;two points for a strong balance sheet, including manageable debt and adequate cash;one point if the company’s an industry leader.
Companies with 10 to 12 points have the most-secure dividends, or the highest level of sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.
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