BlackRock believes that a key driver for 2013 will be the earnings growth forecast of 13.8 % for the region, and with economic growth in the large economies of China, Brazil and India showing signs of stabilization and even acceleration.
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BlackRock Global Funds (BGF) Emerging Markets Equity Income Fund co-manager, Dhiren Shah, said: "After a difficult 2012, Brazil is one of our favourite markets. We anticipate that the operating environment will improve with stronger revenue growth, aided by the Government’s push for greater infrastructure investment."
"Furthermore, in a year of improved economic growth we foresee less Government intervention. Natura Cosmeticos, a Brazilian cosmetics industry, is yielding 3.8% and has increased its dividend by nearly 15% per annum over the last 5 years."
"Russia’s valuations are among the cheapest in Emerging Markets and we anticipate that improved governance will help to enhance the discount. Russia’s historical 16% dividend payout ratio was the lowest in the emerging world, but this have increased steadily and is currently 20 percent (at the end of 2012)."
"Russian oil producer Lukoil is expected to provide a yield of 4.8% in 2013; the company has grown dividends by over 79% in the last four years and has committed to grow these payouts by 15 percent per annum until 2015."
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By GlobalData"Over the last 15 years we have witnessed a steady rise in emerging market companies paying dividends, today over 88% of companies in emerging markets pay dividends to investors, which represents the fastest dividend growth globally since 2001 and provides us with great investment income generation within the fund, Shah concludes.
BlackRock said that its Emerging Markets Equity Income Fund targets a minimum yield of 130% of the index and focuses on investment in companies with sustainable and growing dividends. In 2012 this approach has generated a return of 27.9% net of fees for the fund against an index return of 18.2% and peer group return of 17.1% for an outperformance of 9.7% and 10.8%, respectively.
