Four Frontier Market ADRs with Strong Dividends

Frontier markets are the so-called next emerging markets. While investing in emerging market economies like Brazil, Russia, China and India takes a strong stomach, investing in frontier markets require nerves of steel. Frontier markets lie outside of the realm of emerging markets and they can be considered the “Wild West” of the investment world.

Some of the frontier markets include Middle Eastern countries such as Dubai, Saudi Arabia, the countries of Sub-Saharan Africa such as Nigeria, Burundi, etc., Asian countries such as the Philippines, Indonesia, etc. and the Latin American nations of Colombia, Costa Rica, etc. These markets started to appear in the investing universe in 2007 and 2008 when some global investors looked for much higher returns.

Let's review four U.S.-traded stocks from these markets:

1. Banco Latinoamericano de Exportactns SA (BLX) is “a supranational bank originally established by the central banks of Latin American and Caribbean countries to promote trade finance in Central and South America and the Caribbean (the Region). The Bank operates under the commercial name of Bladex” based in Panama City, Panama. The current yield is 8.85% and the bank has a market cap. of about $301 million. BLX has performed relatively well in the last 52 weeks since it is down only 36%. Out of the30.6 million shares outstanding, 57% are held by institutions.

2. Philippine Long Distance Telephone Co (PHI) is a telecom provider in the Philippines with about 32 million subscribers. Last year the company had a total revenue of $1.4B and revenue has grown at a rate of 17% annually. PHI pays a dividend of 6.65%.

3. Colombia-based petroleum company EcoPetrol SA (EC) was listed on the New York Stock Exchange last September. EC has a dividend yield of 5.91%. EcoPetrol “is among the top 40 oil companies in the world and the four chief oil companies in Latin America. Besides Colombia, where over 60% of domestic production is concentrated, the Company is involved in exploration and production activities in Brazil, Peru and the United States (Gulf of Mexico).”

4. The financial services holding company Creditcorp Ltd (BAP) operates in Peru. BAP provides commercial banking, investment banking, insurance and retail banking. The current yield is 3.50%. Annual revenue growth over the last 5 years is 20.5% and the dividend growth is 45%.

For a few frontier market closed-end funds and ETFs, check out my earlier articles A Few Frontier Market Investment Ideas and A Look at Four Frontier Market ETFs.

Comments

[Jeremy Hellman:]

David -

On BLX, I'd also note that in a world of swiss-cheese balance sheets, these guys have had ZERO loans that have gone bad in the last 8 quarters or so. Imagine that, prudent balance sheet management from a bank. Given that point and the overall high liquidity ratio, the dividend certainly appears safe.

Jan 29 01:24 PM

[David Hunkar:]

Thanks manyathought for the comment.
I did not know that information. I will analyze it and consider for taking a position. Good Luck !

-David

Jan 29 08:40 PM

[Living4Divi...:]

I realize that I am commenting months after your original post. I agree back in Jan/Feb/Mar BLXes dividend looked supersafe.

Well no more, as BLX has recently cut their dividend.

May 21 06:50 AM

[Living4Divi...:]

I pointed out to let you know that even of a corps fundamentals look strong and has a strong balance sheet, there is always the chance for a dividend cut "for the hell of it"

I was just wondering if there was anything in BLXes balance sheet that would have indicated a pending dividend cut, or is it just one of those things?

May 22 09:31 AM

[David Hunkar:]

Interesting to know that BLX cut their dividend.I will check their balance sheet and latest info and see if I can find anything that warranted this cut.

Sure.Some companies do cut their dividend just because so many others are doing it.Thats why I always keep a close watch on my dividend stocks.

Thanks for the info.
-David

May 24 12:38 PM