Investing during times of high interest rates and macroeconomic uncertainty is never easy. This uncertainty led Morgan Stanley to reiterate its recommendation to buy dividend stocks. The investment bank pointed out that the performance of the MSCI Asia Pacific ex Japan High Dividend Index slightly underperformed the MSCI Asia Pacific ex Japan Index in the second quarter of this year, although it lagged only 0.34 percentage points. However, analysts believe there is more potential ahead. “The market is currently pricing in a peak interest rate environment, and UST is volatile [U.S. Treasury] Morgan Stanley analysts wrote in a July 8 research note: “Bond yields and Asia/Emerging Markets continue to favor quality and dividend stocks outperforming. Given cautious risk sentiment in Asia/Emerging Markets, we Still bullish on dividend stocks and seeing support from quality stock valuations. Investor interest in corporate reform and shareholder return themes in Asia/Emerging Markets also remains high, which could benefit the dividend stock list,” conducted using these criteria. 12-month forward assessment: Likely to outperform the MSCI Asia Pacific ex-Japan High Dividend Index; Least likely to announce a dividend cut; Low risk of dividend cuts, such as industry analysts; Market cap over $2 billion. and improving demand for mid-market brands,” “supported sales growth, offsetting a decline in Yibin Wuliangye stock due to reduced supply. Morgan Stanley set a 12-month price target on the stock at 182 yuan ($25.01), giving it a potential upside of approximately 43.8%. Another stock on the list that stands out is Korean tobacco and ginseng maker KT & G. “Domestic revenues are becoming more balanced, while overseas tobacco sales are likely to grow rapidly due to NGP’s regional and product expansion [next generation products] side. Analysts at the bank wrote that the dividend payout ratio remained at around 60%, with more than 30% of dividends being used for share buyback programs. —CNBC’s Michael Bloom contributed to this report.
