Asia Dividend Forecasting | The Rise and Fall of Dividends Across Asian Companies

1.3k Views30 Sep 2020 22:47

SUMMARY

In this Smartkarma Original, we bring to you a quantitative approach for identifying Asian companies that are likely to raise/cut dividend. Applying this approach to a universe of 920+ companies listed across Asia helped us identify 150+ and 20+ companies, respectively, that have a high likelihood of raising/cutting dividends, over the next five years.

What's Original?

We have two separate models, one for forecasting Dividend Raise and the other for Dividend Cut.
Our back test results are very encouraging with >90% hit rate for our Dividend Raise model and 100% hit rate for our Dividend Cut model.
For our Dividend Raise model, we apply a combination of eight stringent parameters and use last 7Y historical data to find companies that have consistently performed strong, lending our model a high hit rate.
For our Dividend Cut model, we differentiate from other models by focusing on companies that have had high dividend payout ratio (>50%) over last 3Y. This criterion helps us in identifying companies where there is limited scope for dividend growth through increase in dividend payouts. In our observation, such companies are most vulnerable to cut dividend when faced with weakening fundamentals or deteriorating balance sheet.

Insight Flow

Live Dashboard
Methodology
- Philosophy
- Dividend Raise Model
- Dividend Cut Model
Universe
Back Test Results
- Dividend Raise Model
- Dividend Cut Model
Model Results
- Companies with High Probability of Dividend Raise
- Companies with High Probability of Dividend Cut
Model Risks & Limitations
Conclusion