Not Registered? Register Now.

1. My Profile >2. Additional Information

By submitting below you certify that you have read and agree to  our privacy policy.

Macro Alerts
Japan: Land of the Rising Sun — and Rising Dividends
15 juil. 2015
Viktor Nossek , Director of Research


WisdomTree conducts an annual screening to measure dividends paid in its developed international Index family. The annual rebalance provides a plethora of data about how dividends are changing across regions, sectors and companies.

At this year’s screening, there were a few notable standouts in terms of growth in Japanese dividends.

Japan’s Dividends Set New Record: This year’s Japan Dividend Stream®—measured in the local currency, the yen—set a new record of ¥9.03 trillion[1]. This number is almost double what the Dividend Stream was at its bottom in 2010. The growth in dividends reflects the increased profits of corporate Japan, as well as companies’ better balance sheet management.

 Three-Year Growth Differentials and Yen Impact: Over the last three years (since the 2012 Index screening), Japan's dividends are up 56% when measured in yen, but they are down 1.6% when measured in U.S. dollars. This change in the exchange rate over the last three years shows how much currency can detract from the experience of local markets. In fact, in U.S. dollar terms, the 2015 dividends were lower than the 2014 dividends and even lower than the 2012 dividends, before Prime Minister Abe was elected at the end of 2012 and ushered in new economic initiatives aimed at restoring growth in Japan.

Japan Dividend Stream in both U.S. Dollars (USD) and Yen Terms

  Black-BG

Sources: WisdomTree, Bloomberg, Standard & Poor’s. Universe comprises companies incorporated within Japan from within the WisdomTree DEFA Index. Data comprises historical Index Screening dates from 31/05/2008 to 31/05/2015. You cannot invest directly in an Index.

Sector Dividend Stream Growth was Also Broadly Positive in Japan

This year’s 14.9% growth in dividends was led by the technology sector, which saw dividends grow by almost 20%. To gain greater insight into this 20%, we looked at the 10 largest Japanese dividend payers within this sector. Four companies stood out for at a minimum doubling their dividends per share compared to the prior year:

  • Yahoo Japan Corporation: An embodiment of the current Japanese trend of returning cash to shareholders, Yahoo Japan Corporation doubled its dividend from the 2014 fiscal year. The company was able to pay over ¥50 billion in dividends from its retained earnings. [2]
  • Tokyo Electron increased its dividend per share from ¥25 to ¥68—approximately 170%! The source of this cash: surplus earnings. [3]
  • Seiko Epson Corporation increased its dividend per share by 130%! [4]
  • Fujitsu doubled its dividend per share. [5]

Industrials were another sector with close to 20% growth. Fanuc represented the largest Japanese dividend payer in this sector; the firm doubled its dividend payout ratio from 30% to 60% as part of its recent focus on returning more profits to shareholders.

Japan Dividend Stream Growth by Sector

  Graph Two DXJ rebalance 14.07.15

Sources: WisdomTree, Bloomberg, Standard & Poor’s. Universe comprises companies incorporated within Japan from within the WisdomTree DEFA Index. You cannot invest directly in an Index.   This new dividend data not only affords a broad cross-market view of Japan’s fundamentals, but also provides the basis for relative valuation insights. WisdomTree’s annual rebalance of its Japan-focused Indexes entails a disciplined process focused on relative valuations. These changes generally can be described as:

  • Stocks getting more expensive—measured on a price-to-dividend basis—receive less weight
  • Stocks getting less expensive—measured on a price-to-dividend basis—receive more weight
Rebalancing back to the Dividend Stream is a critical way to help manage valuation risks. Japan’s markets remain among the more reasonably priced in the major international regions; despite strong gains over last three years, the market has been driven by underlying earnings growth. We see here that the dividend growth also was fairly healthy, and we think that the renewed focus on shareholder returns being displayed broadly in Japan has the potential to lead to further growth of dividends in the future. As of the 31/05/2015 Index screening date, in the WisdomTree DEFA Index: Yahoo Japan Corporation was a 0.08% weight, Tokyo Electron was a 0.04% weight, Seiko Epson Corporation was a 0.04% weight, Fujitsu was a 0.03% weight, and Fanuc was a 0.24% weight. Investors sharing this sentiment may consider the following short ETPs:

All data is sourced from WisdomTree Europe and Bloomberg, unless otherwise stated.

[1] Sources: WisdomTree, Bloomberg, Standard & Poor’s, with data as of the 31/05/15 annual rebalance.

[2] Source: Yahoo Japan Corporation, Notice of Cash Dividend Paid from Retained Earnings, 21/05/15.

[3] Source: Tokyo Electron, Notice Concerning Payment of Dividends from Surplus Earnings (for the Fourth Quarter of the Fiscal Year Ended March 31, 2015), 13/05/15.

[4] Source: Bloomberg.

[5] Source: Bloomberg.  


Disclaimer

WisdomTree Europe Ltd is an appointed representative of Mirabella Financial Services LLP which is authorised and regulated by the Financial Conduct Authority. The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. An investment in ETPs is dependent on the performance of the underlying index, less costs, but it is not expected to match that performance precisely. ETPs involve numerous risks including among others, general market risks relating to the relevant underlying index, credit risks on the provider of index swaps utilised in the ETP, exchange rate risks, interest rate risks, inflationary risks, liquidity risks and legal and regulatory risks. ETPs offering daily leveraged or daily short exposures (“Leveraged ETPs”) are products which feature specific risks that prospective investors should understand before investing in them. Higher volatility of the underlying indices and holding periods longer than a day may have an adverse impact on the performance of Leveraged ETPs. As such, Leveraged ETPs are intended for financially sophisticated investors who wish to take a short term view on the underlying indices. As a consequence, WisdomTree Europe Ltd is not promoting or marketing BOOST ETPs to Retail Clients. Investors should refer to the section entitled "Risk Factors" and “Economic Overview of the ETP Securities” in the Prospectus for further details of these and other risks associated with an investment in Leveraged ETPs and consult their financial advisors as needed. Within the United Kingdom, this document is only made available to professional clients and eligible counterparties as defined by the FCA. Under no circumstances should this document be forwarded to anyone in the United Kingdom who is not a professional client or eligible counterparty as defined by the FCA. This marketing information is intended for professional clients & sophisticated investors (as defined in the glossary of the FCA Handbook) only. ETPs offering daily leveraged or daily short exposures (“Leveraged ETPs”) are products which feature specific risks that prospective investors should understand before investing in them. Higher volatility of the underlying indices and holding periods longer than a day may have an adverse impact on the performance of Leveraged ETPs. As such, Leveraged ETPs are intended for financially sophisticated investors who wish to take a short term view on the underlying indices. As a consequence, WisdomTree Europe Ltd is not promoting or marketing BOOST ETPs to Retail Clients. Investors should refer to the section entitled "Risk Factors" and “Economic Overview of the ETP Securities” in the Prospectus for further details of these and other risks associated with an investment in Leveraged ETPs and consult their financial advisors as needed. Within the United Kingdom, this document is only made available to professional clients and eligible counterparties as defined by the FCA. Under no circumstances should this document be forwarded to anyone in the United Kingdom who is not a professional client or eligible counterparty as defined by the FCA. This marketing information is intended for professional clients & sophisticated investors (as defined in the glossary of the FCA Handbook) only.

Macro Alerts, Equities, FX / Currency Hedging, Europe / Eurozone


This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, its officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.

REGISTER TO RECEIVE BLOG ALERTS

By submitting below you certify that you have read and agree to  our privacy policy.