What are we looking for?<\/p>\n
Sustainable dividends from Japanese stocks set to move even higher with the formation of a new government that ends months of uncertainty.<\/p>\n
The screen<\/p>\n
The election of Japan\u2019s Prime Minister, Sanae Takaichi, and now the formation of her new coalition government, has spurred the country\u2019s Nikkei Stock Average to an all-time high.<\/p>\n
Investors feel that the conservative-minded leader of Japan\u2019s Liberal Democratic Party \u2013 the country\u2019s first female prime minister \u2013 will embrace tax cuts, increase defence spending and boost government investment to spur the economy. <\/p>\n
Meanwhile, the Japanese yen has weakened on speculation that the Bank of Japan may delay further interest-rate increases to foster growth. As our analysts at The Successful Investor<\/a> point out, a weak yen tends to profit Japanese exporters while lifting their appeal with international investors.<\/p>\n Canadian investors have easy access to Japanese stocks through American Depositary Receipts (ADRs) traded on the New York Stock Exchange. ADRs let you hold the same shares traded on the Tokyo exchange.<\/p>\n Here, we\u2019re searching for profitable Japanese companies offering ADRs and with strong growth prospects given the new political\/economic environment. From there, we use our TSI Dividend Sustainability Rating System to pinpoint stocks providing dependable income for investors. Note that the rating system awards points to a stock based on key factors:<\/p>\n Two points if it has raised the payment in the past five years; One point for management\u2019s commitment to dividends; One point for operating in non-cyclical industries; One point for limited exposure to foreign currency rates and freedom from political interference;Two points for a strong balance sheet, including manageable debt and adequate cash; Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments; One point for an industry leader; One point for five years of continuous dividend payments; Two points for more than five <\/p>\n Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.<\/p>\n More about TSI Network<\/p>\n TSI Network<\/a> is the online home of The Successful Investor Inc. \u2013 the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor<\/a>.<\/a> TSI Network is also affiliated with Successful Investor Wealth Management.<\/p>\n What we found<\/p>\n Our TSI Dividend Sustainability Rating System generated six Japanese ADRs ready to move higher, while adding to their dividend payouts. Toyota Motor Corp. TM-N<\/a> and Honda Motor Co. Ltd. HMC-N<\/a> remain Japan\u2019s two biggest auto exporters. Canon Inc. CAJFF<\/a> is still one of the country\u2019s top tech manufacturers, with the low yen only bolstering international sales. Nippon Telegraph and Telephone Corp. NTTYY<\/a> is the leading integrated telecommunications operator in Japan. Meanwhile, the country\u2019s largest bank, Mitsubishi UFJ Financial Group Inc. MUFG-N<\/a>, continues to benefit from increased lending \u2013 as well as higher fees and commissions resulting from the soaring domestic stock market. Finally, global financial services giant Orix Corp. IX-N<\/a> keeps profiting from its range of operations in banking, insurance, real estate and private equity.<\/p>\n We advise investors to do additional research on investments we identify here. <\/p>\n