You’re an income investor and you crave yield. You’re also a smart investor that realizes diversification is an important element to long-term portfolio success.
One way to blend these two important investment ingredients is to look at dividend stocks that pay high yields, but don’t necessarily fit into the traditional cookie cutter-mold of large-cap U.S. equities.
Enter the China dividend stocks’ dragon.
On the other side of the globe, the second-largest economy in the world offers plenty of robust companies with red-hot yields. Like similar domestic firms in the utility, oil, specialty chemical space and telecom sectors, China has a lair of dividend stocks that throw off plenty of cash to shareholders.
In many cases, Chinese dividend stocks also offer the potential for some super-heated share price appreciation, as well as dividend yields that easily surpass all but one of the components in the Dow Jones Industrial Average.
Here are three Chinese dividend stocks delivering fire-breathing yields.
Chinese Dividend Stocks: Huaneng Power International Inc (ADR) (HNP)
YTD Performance: 30%
Dividend Yield: 5.3%
When you’re searching for high-yielding dividend stocks, a good place to look is the utility sector. That’s because utilities take the revenue they collect and pay out much of it in the form of dividends to shareholders. That’s true in the U.S., as well as in China, and it’s definitely true of Chinese energy producer Huaneng Power International Inc (ADR) (HNP).
HNP is primarily an electric power producer, selling electricity to China’s regional power grids. Huaneng generates electric power by multiple means, and with a variety of fuel sources such as coal and natural gas. The company also generates power from green energy sources such as wind and hydro-electric sources.
HNP stock has enjoyed a strong run in 2014, up 30% year-to-date. But also lifting investors’ spirits is its 5.3% dividend yield based on its most recent payout. (Note: HNP pays out on an annual basis.)
China Dividend Stocks: CNOOC Ltd (ADR) (CEO)
YTD Performance: -17%
Dividend Yield: 4.3%
Global oil prices are down, and that hasn’t been a positive for oil companies in China — or anywhere else on the planet.
For one of China’s largest state-run enterprises, CNOOC Ltd (ADR) (CEO), the plunge in oil prices since September has caused a similar decline in the share price of this crude oil and natural gas producer.
Yet despite the recent decline CEO stock, or perhaps because of that decline, yield-seeking investors might want to put CNOOC on their watch list here. When oil prices start to creep higher again (and don’t they always?), so too will the price of CEO stock. Meanwhile, at a dividend yield of 4.3% based on its last two payouts (CEO pays two dividends a year, but not on a regular six-month cycle), you’re also getting paid well to wait for a potential rebound.
China Dividend Stocks: PetroChina Company Limited (ADR) (PTR)
YTD Performance: 3%
Dividend Yield: 4.2%
Like CNOOC, PetroChina Company Limited (ADR) (PTR) is a state-run Chinese oil and gas producer. PTR also happens to be China’s largest oil and gas dragon, which gives it a lot of muscle in the marketplace.
Despite its size, the company hasn’t been immune to the economics of lower global oil prices. Like CEO shares, PTR stock has taken a sharp turn south since September. Yet unlike CNOOC, PetroChina stock remains in positive territory with a year-to-date gain of 3%.
PTR stock pays out similarly to CNNOC, currently yielding 4.2% based on the past two payouts — making it the envy of most large-cap, U.S.-based oil producing dividend stocks.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.