The potential for European companies to raise dividend payouts is high since currently the payout ratio is lower than in the past according to a Allianz Global Investors report.

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From the report:

As earnings blossomed following the 2008 / 2009 financial crisis, the distribution ratios of companies have declined considerably. In Europe, the ratio of paid dividends to earnings per share is currently around 55 %, which is moderate by historical comparison. In the US, it is close to its lowest levels ever, at about 35% (see Chart 6).There is thus scope for dividend hikes.

Source: Dividend strategies in times of financial repression, Allianz Global Investors

Oil prices have fallen to a four-year low and continue to fall with prices closing at $86.44 per barrel(Brent) yesterday for December delivery. One way to profit from lower oil prices is to invest in emerging market equities as they are major oil importers. According to one Deutsche Bank research report, Europe & Asia (excluding Japan) are projected to be the biggest beneficiaries from a growth perspective.

From the DB research report:

We estimate that a USD10 fall in the oil price with boost growth in Europe and Asia by 0.5 and 0.8 percentage points respectively.

From a trade perspective, Thailand, South Korea, Chile and the Ukraine will benefit most. Meanwhile Venezuela, Russia and Colombia will suffer on a relative basis given the large share of petroleum and petroleum product exports in these countries.

From a regional equity market perspective, we would expect markets such as the US, Canada and EM EMEA to under-perform relative to Japan and the Euro area given the larger energy exposure by market cap in these equity markets.

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Source: Commodity Themes In 2014, Deutsche Bank

Ten stocks from countries that benefit from lower oil prices are listed below for further research:

1.Company: Banco Santander-Chile (BSAC)
Current Dividend Yield: 3.60%
Sector: Banking
Country: Chile

2.Company: Empresa Nacional de Electricidad SA (EOC)
Current Dividend Yield: 2.06%
Sector: Electric Utilities
Country: Chile

3.Company:Philippine Long Distance Telephone Co (PHI)
Current Dividend Yield: 4.12%
Sector: Telecom
Country: Philippines

4.Company: HDFC Bank Ltd (HDB)
Current Dividend Yield: 0.65%
Sector: Banking
Country: India

5.Company: ICICI Bank Ltd(IBN)
Current Dividend Yield: 1.40%
Sector: Banking
Country: India

6.Company: Israel Chemicals Ltd. (ISCHY)
Current Dividend Yield: 8.13%
Sector: Fertilizers
Country: Israel

7.Company: POSCO (PKX)
Current Dividend Yield: 2.12%
Sector: Steel & Iron
Country: South Korea

8.Company: Nedbank Group Limited (NDBKY)
Current Dividend Yield: 4.33%
Sector: Banking
Country: South Africa

9.Company: Standard Bank Group Limited (SGBLY)
Current Dividend Yield: 4.34%
Sector: Banking
Country: South Africa

10.Company:Telekomunikasi Indonesia Tbk Perusahaan Perseroan (TLK)
Current Dividend Yield: 2.42%
Sector:  Telecom
Country: Indonesia

Note: Dividend yields noted above are as of Oct 28, 2014. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: No Positions

Yesterday we looked at the comparison of US returns against other developed markets. In this post lets take a look at the emerging market returns by country over the past 10 years.

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Source: Henderson Global Investors

Note: The returns shown above are based on the country’s respective MSCI country index.

A few observations from the above chart:

• Brazilian stocks soared with the boom in the commodity markets up until 2007. Then in 2008 during the global financial crisis stocks plunged over 56%. Since 2010 Brazilian stocks have performed poorly.
• China has performed better in the past 3 years than Brazil.
• Except in 2008 and 2013, Indonesian stocks have yielded solid returns every year.
• Similarly, Poland has been one of the top performing markets market emerging and East European markets.
• Overall no country has been the top performer in two consecutive years.

Related ETFs:

• iShares MSCI Indonesia Investable Market Index ETF (EIDO)
• iShares MSCI Brazil Index (EWZ)
• Market Vectors® Russia ETF (RSX)
• iShares MSCI South Africa Index Fund (EZA)
• iShares FTSE/Xinhua China 25 Index Fund (FXI)

Disclosure: No Positions