Chinese Stocks With Strong Gains, Solid Dividend Yields

by Jim Woods | March 12, 2012 8:00 am

There are a host of justified concerns when considering investing in Chinese stocks. An overheated housing sector, declining auto sales and a slowdown in manufacturing activity are just some of the biggest reasons why China’s dragging economy[1] is likely to put pressure on equities tied to her fortunes. Then we had the recent announcement from Chinese Premier Wen Jiabao that the country was cutting its 2012 GDP growth target from 8% to 7.5%. The lowered GDP guidance represents the lowest level in that metric in eight years.

So, given this reality, why would you want to invest in Chinese stocks now?

Well, for one thing, Chinese stocks, as represented by the iShares FTSE China 25 Index (NYSE:FXI[2]), have done quite well of late. Year-to-date, this measure of blue-chip Chinese companies is up more than 12%, which is beating the gains made in the S&P 500 Index so far this year, and double the gains we’ve seen in the Dow Industrials.

In addition to the solid upside being demonstrated in Chinese stocks, there’s a less-obvious reason to look some of the stocks based in the country, and that’s a solid dividend yield. Although we don’t normally think of emerging-market stocks as being dividend payers, there are a host of good Chinese companies with both strong upside potential and that reward investors with tasty yields.

China’s stalwart state-owned oil company CNOOC Limited (NYSE:CEO[3]) is a strong energy sector play, a sector that’s traditionally good for throwing off big dividend yields. The stock is up a very nice 25% in 2012, and it currently boasts a respectable 2.7% dividend yield.

Technology stocks aren’t normally big dividend payers, but Taiwan Semiconductor (NYSE:TSM[4]) is an exception. Shares of the chipmaker are up 13% this year, a very healthy upside surge. The stock also gives investors a 2.9% dividend yield to go along with that upside.

One of the best-of-breed Chinese dividend payers is telecom firm China Mobile (NYSE:CHL[5]). The company is the largest mobile carrier in China, and it could be getting even larger real soon once it begins selling Apple’s (NASDAQ:AAPL[6]) iPhone later this year. The stock is up 14% year-to-date, and has a dividend yield of 3.5%.

Shipping companies are another segment of the market known as being strong dividend providers, and in China, the big name in the space is Seaspan (NYSE:SSW[7]). The company is a leader in the global container shipping, mostly transporting goods to and from China. The Hong Kong-based Seaspan share’s are up 38% this year, and that gain comes along with a robust 3.9% dividend yield.

There’s nothing better for an investor than participating in strong upside and getting paid to do so. That’s true here in the United States, in China — and all points in between.

As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2012/03/chinese-stocks-with-strong-gains-solid-yields-ceo-tsm-chl-ssw/

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