As a region, Asia has long been synonymous with growth. And income investors have traditionally hunted for dividends in developed markets such as the UK and Europe. While not historically seen as a main port of call for income investors’ capital, the Asia Pacific region has upped its game in the dividend stakes in recent years.
Asian companies are increasingly returning cash to shareholders by way of dividends. Corporate governance reforms in the likes of Japan and South Korea are leading to increased dividends and share buybacks. And as a result, Asia Pacific’s dividend growth potential is becoming increasingly difficult for UK investors to ignore.
Go East for income
Valuations remain supportive in many parts of Asia, particularly when compared with the long-term earnings and cash generation potential of many of the region’s high-quality businesses.
Furthermore, Asia already has an established dividend paying culture. It is also worth noting that nearly 40% of Asia ex-Japan companies have net cash balance sheets. This means they have the cash to sustain their payouts, even during broader global macroeconomic downturns.
Average payout ratios across the region are lower than those of developed markets. In turn, this leaves significant room for corporations to expand distributions as their profits grow.
Deep pool of dividends
Darius McDermott, managing director of FundCalibre, says income investors shouldn’t overlook Asia. ‘Gains in the region’s largest technology stocks have pushed the index yield down to about 1.7%, but that headline figure hides a deep pool of companies paying healthy and, crucially, growing dividends,’ observes McDermott.
‘A steadily rising dividend is the mark of a strong business, and over time that compounding is far more valuable than a high starting yield. Corporate governance has also improved markedly. Because UK and global equity income funds tend to hold very little in Asia, the region offers real diversification benefits too.’
Asia also shows that growth and income need not be mutually exclusive, says McDermott. TSMC (NYSE:TSM) manufactures the advanced chips powering the AI build-out and has been one of the biggest beneficiaries of the surge in AI spending. ‘Yet it has doubled its annual dividend since 2022, raised its quarterly payout by a further 17% this year and has not cut its dividend since 2009,’ notes the funds expert.
Diversify your dividends
In short, Asia offers a diverse range of income opportunities, from the established income generating markets of Australia to faster growing economies where rising wealth and economic development could support the next generation of income payers.
UK investors are likely to be less familiar with Asian stocks and so the easiest way to get exposure is via funds. Below, we highlight six actively-managed portfolios which should appeal to investors seeking to diversify their dividends.
Six of the best: Asian income funds
Henderson Far East Income (LON:HFEL)
At 10.2%, Henderson Far East Income (LON:HFEL) offers the highest yield in the AIC’s Asia Pacific Equity Income sector. The £590 million cap trust is also closing in on full AIC ‘Dividend Hero’ status, having increased the dividend for 18 consecutive years.
HFEL’s high and growing yield is popular with income-hungry investors, as reflected in a 4.6% share price premium to NAV (net asset value). This premium has enabled HFEL to issue shares, which alongside strong absolute performance, has boosted the size of the trust and resulted in promotion to the FTSE 250 Index earlier this year.
| Share price: 245.5p | Premium to NAV: 4.6% |
| Dividend yield: 10.2% | 5-yr annualised DPS growth: 1.4% |
Manager Sat Duhra has constructed a portfolio of value orientated equities with a focus on cash flow generation from companies with the ability to sustain and grow dividends. The portfolio is invested in sectors such as telecommunications, energy, and financials, as well as more growth-focused companies bringing exposure to exciting tech names in Asia.
At last count, the top 10 spanned everything from Korean tech titans Samsung Electronics (LON:SMSN) and SK Hynix (NASDAQ:SKHY) to Brilliance China Automotive (HKG:1114).
Sharesify views this trust as a savvy way to play Asia’s improving dividend picture. HFEL’s high dividend is also well supported by revenue reserves, giving us confidence the trust can continue raising the shareholder reward for years to come.
Aberdeen Asian Income Fund (LON:AAIF)
Another attractive investment trust option is Aberdeen Asian Income Fund (LON:AAIF), which trades at a 6.3% discount to NAV and offers a juicy 7.4% dividend yield. The investment trust aims to provide investors with a combination of income and capital growth through a diversified portfolio of high-quality Asia Pacific companies.
Over the past five years, Aberdeen Asian Income has delivered annualised dividend growth of 11.8% and is just three years away from the 20 years of unbroken dividend growth required for full AIC Dividend Hero status.
| Share price: 287p | Discount to NAV: 6.3% |
| Dividend yield: 7.4% | 5-yr annualised DPS growth: 11.8% |
Managed by Isaac Thong and Eric Chan, Aberdeen Asian Income Fund seeks to capture Asia’s growth through a total return approach combining yield and earnings growth. The managers focus on quality income, dividend sustainability and exposure to long-term structural growth themes. A focus on quality businesses with strong earnings and robust balance sheets lends the portfolio resilience during periods of market turbulence.
In recent periods, the fund’s semiconductor and hardware holdings across Taiwan and South Korea have delivered spectacular gains. So the managers have taken profits and reinvested the proceeds into sectors such as financials and industrials. As of 30 September 2026, top 10 holdings included TSMC, mining titan Rio Tinto (LON:RIO) and Mumbai-based HDFC Bank (NYSE:HDB).
JPMorgan Asia Growth & Income (LON:JAGI)
JPMorgan Asia Growth & Income Trust (LON:JAGI) is the best 10-year share price total return performer in the AIC’s Asia Pacific Equity Income sector. Managed by Robert Lloyd and Pauline Ng, the trust offers an attractive 6.5% dividend yield. This is a result of the enhanced dividend policy that pays out 1.5% of NAV each quarter. Furthermore, the trust has grown the payout by an annualised compound rate of 11.3% over the past five years.
The fund, popularly known by its JAGI ticker, is an all-weather portfolio of the best ideas in Asia. Lloyd and Ng take an active, long-term approach when selecting equities for JAGI’s portfolio. They take a bottom-up approach to investing, using the sizeable resources of the JPMorgan Emerging Markets and Asia Pacific Equities team to identify high quality, dynamic businesses, which they will hold in a reasonably concentrated portfolio of 65 stocks at last count.
| Share price: 506p | Discount to NAV: 3.7% |
| Dividend yield: 6.5% | 5-yr annualised DPS growth: 11.3% |
The trust has significant allocations to Taiwan, Korea, India and also China, which Ng says has become an investible market again. JAGI has a rough 24% allocation across the portfolio, a strategic decision that has added considerable alpha to the trust’s performance despite the seemingly negative headlines about the region.
However, it should be noted that JAGI’s China exposure is merely a symptom of its bottom-up, stock selection process, not a geographic assets allocation decision. Information Technology and Financials are JAGI’s two biggest sector weights. Top 10 holdings include TSMC, SK Hynix and Chinese tech conglomerate Tencent (HK:0700), as well as China Yangtze Power (SHA:600900) and Indian financial powerhouse ICICI Bank (NSE:ICICIBANK).
Schroder Oriental Income (LON:SOI)
Schroder Oriental Income Fund (LON:SOI) aims to tap into the Asian income story and help investors diversify their dividends. Managed by Richard Sennitt, the trust is the best one and five-year share price total return performer in the AIC’s Asia Pacific Equity Income sector. It has returned the best part of 180% over the past decade, yet still offers value on a modest discount to NAV.
By focusing on quality companies with attractive dividend growth prospects, Sennitt is confident in the portfolio’s income generating potential. Schroder Oriental Income has increased its dividend every year since launch and is recognised as part of the AIC’s ‘next generation’ dividend heroes.
| Share price: 427p | Discount to NAV: 3.6% |
| Dividend yield: 3.1% | 5-yr annualised DPS growth: 3.4% |
If Schroder Oriental Income raises its dividend again when it publishes its annual results on 11 November, it will become the first Asia-focused trust to join the AIC’s Dividend Heroes, a list long dominated by UK and global trusts.
Jupiter Asian Income Fund (BZ2YND8)
For investors who prefer open-ended funds, Jupiter Asian Income (BZ2YND8) avoids mainland China and leans towards developed markets such as Australia. McDermott says that makes it a relatively defensive option, and he points out the fund has returned 201% over ten years, compared with 109% for the IA Asia Pacific Excluding Japan sector.
The £2.8 billion fund is managed by Jason Pidcock and Sam Konrad. They invest in companies with strong management teams and a sustainable advantage enabling them to generate cash over a long period to fund dividends.
| Fund type: Unit trust | Price: 389.8p |
| Ongoing charge: 0.98% | Yield: 2.4% |
The fund aims to outperform the FTSE All World Asia Pacific ex Japan Index and is ranked first quartile in the IA Asia Pacific Excluding Japan sector over one, three and five years.
High concentration
Jupiter Asian Income invests in five countries across developed Asia, culminating in a high concentration 25-stock portfolio. The fund targets a yield at least 20% more than its benchmark index and currently holds two of Asia Pacific’s big artificial intelligence (AI) plays, namely TSMC and Samsung Electronics. Other top 10 positions include mining giant BHP Group (ASX:BHP) and Melbourne-based banking group ANZ (ASX:ANZ).
Guinness Asian Equity Fund (BDHSRD9)
FundCalibre’s McDermott is also a fan of Guinness Asian Equity Income (BDHSRD9), which runs a concentrated portfolio of 36 equally-weighted stocks chosen for their ability to sustain dividend growth, and yields 3.7%.
This strategy seeks income and capital growth and invests in high-quality, dividend-paying Asian equities across the Asia Pacific region.
| Fund type: OEIC | Price: £19.27 |
| Ongoing charge: 0.77% | Yield: 3.7% |
Managers Edmund Harriss, Mark Hammonds and Valerie Huang seek to reduce risk by focusing on best-in-class companies and sustainable dividends. They seek out firms making a real return on investment of at least 8% for each of the past eight years.
The equal weighing, combined with the managers’ ‘one-in, one-out’ policy, means there isn’t a long tail of smaller holdings in the fund. In turn, this means each stock can move the needle in terms of performance. Top 10 positions at last count included China Construction Bank (HKG:0939), Korean Reinsurance (KRX:003690) and India’s Tech Mahindra (NSE:TECHM).
Disclaimer: James Crux has a personal interest in Aberdeen Asian Income Fund.
