EM dividends: Olympian returns?

The Czech Republic takes an unlikely first place as the emerging market with the highest average dividend pay-out ratio for equities, with podium finishes for Brazil and Qatar.

At around 40%, Mexico’s average pay-out ratio is below that of these medal winners’ – but it is broadly in line with emerging markets as a whole. In our view, the quantum of pay-out is not necessarily the best indicator of successful equity income investment. Far more important are the sustainability of the pay-out ratio, and the potential for future dividend growth (clearly influenced by level of debt penetration too).

On this basis, we view Mexico as one to watch for the future and a worthwhile scouting ground for winners in the long-term equity income space.

Sophia Whitbread – Newton, a BNY Mellon company

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