9 Best Dividend Stocks to Buy in China

by Jeff Reeves | May 19, 2010 11:04 am

Among the best investments to buy now in China are a number of high-yield dividend stocks. These include crude oil, natural gas and coal energy stocks such as Yazhou Coal Mining Co. Ltd. (YZC[1]), CNOOC Ltd. (CEO[2]), PetroChina Co. Ltd. (PTR[3]) and China Petroleum & Chemical Corp. (SNP[4]). Also in the mix are communications stocks such as China Mobile Limited (CHL[5]), City Telecom (H.K.) Limited (CTEL[6]) and Giant Interactive Group, Inc. (GA[7]). Rounding out the list is the China rail stock Guangshen Railway Co. Ltd. (GSH[8]) and health care stock China Medical Technologies, Inc (CMED[9]).

Finding the best low-risk investments means buying the best dividend stocks for many traders. But finding the best stocks to buy right now often means having an investment strategy that covers emerging markets instead of focusing on blue chip stocks. That creates a sticky situation for dividend investment portfolios these days, since some of the stocks with the highest dividend yields often see sluggish price movement in shares.

Well what if you could get the best of both investment worlds: A high dividend yield like the ones you can find in U.S. blue chips but the stock growth you can expect from a booming emerging market like China? That’s just what these nine Chinese dividend stocks provide.

Please note: These dividend yields are annualized rates based on previous payouts. One big disbursement can skew the annualized yield for a stock. Also, as with any investment there are no guarantees on these yields — stocks may be raising dividend yields as a whole, but there’s no guarantee these dividends will stay put for long. Stocks cut or eliminate dividends all the time, even in good markets, so nothing is set in stone.

Let’s take a closer look at China stocks YZC, CEO, PTR, SNP, CHL, CTEL, GA, GSH and CMED now.

Best Dividend Stock in China – Yazhou Coal Mining (YZC)

Market Cap: $10.1 billion
Dividend Yield:1.6%

Yazhou Coal Mining Co. Ltd. (YZC[1]) engages in coal mining, processing and transportation to the Chinese industrial sector. Though much effort has been made to modernize China’s power grid and reduce pollution, coal remains one of the chief sources of power in the nation. That means China dividend stock YZC has a steady stream of profits built in that it can deliver back to investors. In addition to serving the power companies in China, Yazhou coal also produces metallurgical coal for the steel industry, among others.

Best Dividend Stock in China – Giant Interactive (GA)

Market Cap: $1.6 billion
Dividend Yield: 2.4%

Giant Interactive Group, Inc. (GA[7]) offers a fairly substantial yield, but when you consider this China stock’s growth potential, it becomes more appealing than just a dividend investment. GA develops and operates online games in the People’s Republic of China, mainly massively multiplayer online games. Gaming is a huge growth industry in China as the nation becomes more wired and a booming middle class looks for Western-style entertainment. This bodes very well for China dividend stock Giant Interactive.

Best Dividend Stock in China – CNOOC Ltd. (CEO)

Market Cap: $69.2 billion
Dividend Yield: 3.0%

CNOOC Ltd. (CEO[2]), or more formally the Chinese National Offshore Oil Corporation, is one of the largest crude oil stocks in the world. Headquartered in Hong Kong, this dividend stock boasts net proved reserves of about 2 1.67 billion barrels of crude oil and 5,944.0 billion cubic feet of natural gas. As the global recovery takes hold and energy demand increases in China, you can expect this dividend stock to cash in even more.

Best Dividend Stock in China – Guangshen Railway (GSH)

Market Cap: $2.3 billion
Dividend Yield: 3.2%

Guangshen Railway Co. Ltd. (GSH[8]) operates nearly 250 pairs of passenger trains in the People’s Republic of China. Why pairs, you ask? Well, because it’s awfully hard to turn a train around when it’s sitting on the track! This China dividend stock is mainly engaged in passenger and freight transportation on the Shenzhen-Guangzhou-Pingshi Railway that runs north-south through China’s Guangdong Province for about 300 miles. GSH transportation includes “bullet” commuter trains with a top speed of 125 miles an hour.

Best Dividend Stock in China – PetroChina (PTR)

Market Cap: $21.9 billion
Dividend Yield: 3.3%

PetroChina Co. Ltd. (PTR[3]) is one of China’s top manufacturer and distributor of crude oil, natural gas and related energy products. This China dividend stock is involved in every step of the fossil fuel process, from exploration and production of crude oil to refining, transportation, storage and distribution. Like previous dividend stock Sinopec, PTR also is involved in chemicals as well, producing crude oil distillates such as diesel oil, kerosene and lubricants along with synthetic resins, fibers and rubbers.

Best Dividend Stock in China – China Mobile (CHL)

Market Cap: $184.7 billion
Dividend Yield: 3.6%

China Mobile Limited (CHL[5]) is a top telecom service provider in China, and as of 2009 it was the world’s largest mobile phone operator with over 508 million customers. The state-run China Mobile is also the largest China company listed abroad on the NYSE or any other foreign index. This top dividend stock provides wireless communications services including voice and data plans, helping China forge ahead into a digital 21st century economy.

Best Dividend Stock in China – Sinopec (SNP)

Market Cap: $65.0 billion
Dividend Yield: 3.9%

China Petroleum & Chemical Corp. (SNP[4]), or more commonly Sinopec, operates as an integrated oil and gas company in China. But in addition to crude oil exploration, refining and production, Sinopec also runs a chemical business that involves producing basic organic chemicals, synthetic fibers and resins and chemical fertilizers. With the creeping price of crude oil, this China dividend stock has a bright future for the second half of 2010.

Best Dividend Stock in China – China Medical Technologies (CMED)

Market Cap: $360.1 million
Dividend Yield: 4.7%

China Medical Technologies, Inc (CMED[9]) is an aptly named China-based medical device company. This top dividend stock manufactures high-tech diagnostic products including luminescent chemicals used to help with special scans of the body. Whether it’s screening a patients blood or taking a look at the in-utero development of baby, CMED has a host of cutting edge products bringing modern medicine to mainland China. As the Chinese economy evolves, so do its medical procedures – providing big growth for this dividend stock.

Best Dividend Stock in China – City Telecom (CTEL)

Market Cap: $410.8 million
Dividend Yield: 6.5%

City Telecom (H.K.) Limited (CTEL[6]) provides residential and business telecommunications in Hong Kong. The company also operates in Canada through subsidiaries, but City Telecom’s bread and butter is international long distance calls services and broadband Internet access service in Asia. The stock is on a tear in 2010, surging more than 25% year-to-date while the broader market is essentially flat since January 1. This dividend stock is cashing in as China moves to a digital economy.

As of this writing, Jeff Reeves did not own positions in any of the stocks named here.

  1. YZC: http://studio-5.financialcontent.com/investplace/quote?Symbol=YZC
  2. CEO: http://studio-5.financialcontent.com/investplace/quote?Symbol=CEO
  3. PTR: http://studio-5.financialcontent.com/investplace/quote?Symbol=PTR
  4. SNP: http://studio-5.financialcontent.com/investplace/quote?Symbol=SNP
  5. CHL: http://studio-5.financialcontent.com/investplace/quote?Symbol=CHL
  6. CTEL: http://studio-5.financialcontent.com/investplace/quote?Symbol=CTEL
  7. GA: http://studio-5.financialcontent.com/investplace/quote?Symbol=GA
  8. GSH: http://studio-5.financialcontent.com/investplace/quote?Symbol=GSH
  9. CMED: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMED

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