The 12 Best Japanese Dividend Stocks - A Comprehensive Overview (2024)

Last Updated on 21 November, 2023 by Rational thinking

Japanese dividend stocks

Japanese dividend stocks are appealing investments for many investors looking to diversify their portfolios. Increasingly, investors are looking for ways to hedge against the volatility of the global markets and Japanese dividend stocks offer an attractive option. Japan’s economy is the third largest in the world and it has a long history of stable economic growth. Japanese stocks have also performed well over the past few years. This has created an opportunity for investors to generate a steady income from the dividends these stocks pay out.

Dividend stocks have historically been a popular investment strategy and Japan offers a unique opportunity for investors to gain exposure to a wide variety of dividend stocks. Japanese dividend stocks offer a variety of benefits including reliable and consistent dividend payments, stock appreciation potential, and diversification.

When investing in Japanese dividend stocks, investors should keep in mind the risk factors associated with Japan’s economy, as well as the potential for fluctuations in the market. The Japanese economy is heavily reliant on exports, so any disruption in the global economy can have a negative impact on the stock market. Additionally, the Japanese government has implemented a variety of policies to stimulate the economy, and these policies can create volatility in the stock market.

Investors should also be aware of the taxation policies associated with Japanese dividend stocks.

The 12 best Japanese dividend stocks

1. Sony Corporation (NYSE: SNE): Sony Corporation is a multinational conglomerate based in Tokyo, Japan. It is one of the world’s largest producers of consumer electronics and is known for its PlayStation gaming consoles, cameras, televisions and audio equipment. Sony has a long history of paying dividends to its shareholders, making it one of the best Japanese dividend stocks. The company currently yields 2.3%, and has paid dividends for 25 consecutive years.

2. Mitsubishi UFJ Financial Group (NYSE: MUFG): Mitsubishi UFJ Financial Group is one of the largest banks in Japan. It offers a wide range of financial services, including banking, securities trading, insurance and asset management. The company currently yields 3.2%, and has paid dividends for 10 consecutive years.

3. Japan Tobacco, Inc. (NYSE: JAPAF): Japan Tobacco is the largest tobacco company in the country. It has a near-monopoly on the Japanese market, and has a strong presence in the international market as well. The company currently yields 3.7%, and has paid dividends for 15 consecutive years.

4. Nippon Telegraph & Telephone Corporation (NYSE: NTT): Nippon Telegraph & Telephone Corporation is the largest telecommunications company in Japan. It provides fixed-line and mobile phone services, as well as broadband internet. The company currently yields 4.3%, and has paid dividends for 15 consecutive years.

5. Sumitomo Mitsui Financial Group (NYSE: SMFG): Sumitomo Mitsui Financial Group is one of the largest banks in Japan. It offers a wide range of financial services, including banking, securities trading, insurance and asset management. The company currently yields 3.1%, and has paid dividends for 10 consecutive years.

6. SoftBank Group Corp (NYSE: SFTBF): SoftBank Group is a Japanese holding company, investing in a wide range of businesses, including internet services, telecommunications and technology. The company currently yields 2.2%, and has paid dividends for 4 consecutive years.

7. Mizuho Financial Group (NYSE: MFG): Mizuho Financial Group is one of the largest banks in Japan. It offers a wide range of financial services, including banking, securities trading, insurance and asset management. The company currently yields 2.6%, and has paid dividends for 14 consecutive years.

8. Fast Retailing Co., Ltd. (TYO: 9983): Fast Retailing is the parent company of the Uniqlo clothing chain, which is one of the most successful clothing retailers in the world. The company currently yields 0.7%, and has paid dividends for 10 consecutive years.

9. Dai-ichi Life Holdings, Inc. (TYO: 8750): Dai-ichi Life is one of Japan’s largest life insurance companies. It offers a wide range of insurance products and services, including life, health and annuity insurance. The company currently yields 2.3%, and has paid dividends for 8 consecutive years.

10. KDDI Corporation (TYO: 9433): KDDI is one of the largest telecommunications companies in Japan. It provides fixed-line and mobile phone services, as well as broadband internet. The company currently yields 3.2%, and has paid dividends for 5 consecutive years.

11. Tokyo Electric Power Company Holdings, Inc. (TYO: 9501): Tokyo Electric Power Company is one of the largest electric utilities in Japan. It generates and distributes electricity to millions of homes and businesses in the Tokyo area. The company currently yields 4.7%, and has paid dividends for 10 consecutive years.

12. Nippon Yusen Kabushiki Kaisha (TYO: 9101): Nippon Yusen Kabushiki Kaisha is one of the largest shipping companies in Japan. It provides international shipping services and cargo transport solutions. The company currently yields 1.8%, and has paid dividends for 14 consecutive years.

Which Japanese stocks did Warren Buffett buy?

Warren Buffett is widely known for his long-term investments in Japanese stocks. In 2006, Buffett’s Berkshire Hathaway purchased 5.5% of the stock of Iscar, a metal-cutting tools manufacturer in Israel. The same year, Buffett made his first major investment in Japan, buying a 5.7% stake in the Japanese trading house, Marubeni Corporation.

Buffett has since made several other investments in Japanese stocks, including a 3.7% stake in Mitsubishi UFJ Financial Group, a 9.9% stake in the Japanese trading house Itochu, and a 9.9% stake in the Japanese trading house Sumitomo. He also purchased a 5.3% stake in the Japanese auto parts maker Taisei Corporation.

Buffett’s investments in Japanese stocks have been driven by his belief in the long-term potential of the Japanese economy. He believes that the current low valuations of Japanese stocks make them attractive investments, and that the Japanese market is a great place to look for long-term growth opportunities. He has praised the Japanese economy for its stability and resilience, and believes that political stability, a strong education system, and a culture of innovation will help Japan continue to prosper in the future.

Buffett also believes that Japanese stocks are undervalued relative to their peers in other countries. He has noted that Japanese stocks are trading at levels that are much lower than the valuations of stocks from other countries, and that this creates an opportunity for investors to buy Japanese stocks at attractive prices. This has enabled Buffett to make profitable investments in Japanese stocks, and to benefit from the long-term growth potential of the Japanese economy.

How to buy Japanese stocks?

Buying Japanese stocks is a great way to diversify your portfolio and gain exposure to the Japanese market. There are a few different ways to purchase Japanese stocks.

1. Purchase Japanese stocks directly through a Japanese brokerage. Many international brokerages, such as Interactive Brokers, offer access to the Japanese markets. You will need to open a brokerage account and deposit funds in order to purchase Japanese stocks.

2. Purchase Japanese stocks indirectly by buying American Depository Receipts (ADRs). ADRs are securities that represent shares of a foreign company. They are traded on American exchanges and can be easier to purchase than directly buying a foreign stock.

3. Purchase Japanese mutual funds or exchange-traded funds (ETFs). Mutual funds and ETFs are professionally managed portfolios of stocks and other securities. They are traded on exchanges, just like stocks, and can provide an easy way to gain exposure to the Japanese markets.

No matter which method you choose, you should always do your research and understand the risks before investing. Additionally, you should consult with a financial advisor to determine which investments are best suited for your goals.

Why are Japanese stocks cheap?

Japanese stocks are currently considered to be relatively cheap compared to other major global markets. There are a number of factors that have contributed to the relative affordability of Japanese stocks.

The first and most important factor driving down the price of Japanese stocks is the slow economic growth of the country. Japan has experienced a long period of stagnation, with little to no growth in GDP or wages. This has led to a decrease in domestic demand for goods and services, leading to a decrease in corporate profits. As a result, Japanese companies have had to cut costs and downsize operations, leading to a decrease in stock prices.

Another factor driving down the price of Japanese stocks is the country’s high debt-to-GDP ratio. Japan’s government debt is estimated to be more than twice its GDP, which has made investors wary of putting money into the country. This has caused the Japanese stock market to underperform compared to other developed markets.

Finally, the Japanese stock market is relatively illiquid, meaning there is not a lot of trading volume in the stock market. This means that stocks are not as heavily traded as they are in other markets, leading to a decrease in stock prices due to lack of demand.

Overall, the combination of these factors has led to Japanese stocks being considered relatively cheap compared to other global markets. However, with the recent recovery in the Japanese economy and the government’s efforts to increase foreign investment, the prices of Japanese stocks may begin to rise in the future.

Japanese dividend stocks vs American dividend stocks?

Dividend stocks are a popular investment choice for investors seeking a steady stream of income from their investments. Both Japanese and American dividend stocks offer investors the potential for consistent and growing income, but there are important differences between the two types of stocks.

Japanese dividend stocks tend to pay higher dividends than American dividend stocks, with higher yields that can range from 4%-8%. These dividends are usually paid quarterly and are more stable than American dividend stocks. The Japanese government has a policy of keeping dividend payments high and stable, protecting investors from sudden changes in the dividend rate.

In contrast, American dividend stocks tend to pay lower dividends than Japanese stocks. The average dividend yield in the US is around 2.5%, though some stocks do pay higher dividends. The dividend rate of American stocks is more volatile and subject to sudden changes due to macroeconomic and political factors.

When investing in Japanese and American dividend stocks, it is important to consider the risk/reward profile of each. Japanese dividend stocks tend to be less risky than American dividend stocks due to their stable dividends and low volatility. However, American dividend stocks offer the potential for faster dividend growth due to their higher yields and higher volatility.

Ultimately, when deciding between Japanese and American dividend stocks, it is important to consider your investment goals and risk tolerance. Japanese dividend stocks can provide a steady and reliable income, while American dividend stocks can offer the potential for higher returns.

Pros and cons of buying Japanese dividend stocks

Pros:

1. Tax Advantages: Japanese dividend stocks offer investors a variety of tax advantages. Dividend income is generally tax-free in Japan, which can be a great benefit for investors. Additionally, foreign investors may be eligible for a reduced withholding tax rate of 15%.

2. Stability: Japan has a long history of economic stability and is seen as a safe haven for investors. This stability can be a great benefit for investors who are looking for reliable long-term investments.

3. Diversification: By investing in Japanese dividend stocks, investors can add a valuable asset class to their portfolio that is not correlated with US or other global stock markets. This can help investors spread out risk and potentially increase returns.

4. Liquidity: Japanese dividend stocks are generally highly liquid and can be traded on a variety of exchanges. This makes them easy to buy and sell and can be a great benefit for investors.

Cons:

1. Currency Risk: Japanese dividend stocks are denominated in Japanese yen, which means that investors may be exposed to currency risk. This can be a major concern when investing in Japanese dividend stocks, as movements in the currency can significantly affect returns.

2. Lack of Transparency: Japanese companies are not required to adhere to the same level of disclosure as US companies. This can make it difficult for investors to evaluate the risk associated with investing in Japanese dividend stocks.

3. Volatility: The Japanese stock market can be volatile and is subject to large swings in prices. This can be a major concern for investors who are looking for stable returns from their investments.

4. Political Risk: Japan is a largely hom*ogeneous society and has a long history of political stability. However, there is always the risk of political upheaval which can lead to large losses for investors.

The answer to this question depends on a variety of factors. Generally speaking, Japanese stocks are seen as relatively shareholder friendly when compared to many other markets. This is largely due to the fact that Japanese companies tend to have higher dividend yields and longer-term investment horizons.

In terms of dividend yield, Japanese stocks have traditionally outperformed other markets due to their lower taxation rate on dividends. This has made them attractive to long-term investors looking for a steady income stream. Additionally, Japanese companies are often seen as having a longer-term investment horizon, meaning that they are more likely to invest in long-term projects or strategies that may take many years to yield a return. This allows investors to benefit from the long-term growth prospects of the company without having to worry about short-term fluctuations.

However, it is important to note that not all Japanese stocks are created equal. Some companies may be more shareholder friendly than others, depending on their corporate governance practices, dividend policies, and other factors. Additionally, the economic environment of Japan has been known to be quite volatile in recent years, which can affect the performance of stocks. Therefore, it is important to do your research and understand the individual company before investing in any Japanese stocks.

How big is the Japanese stock market?

The Japanese stock market, or the Tokyo Stock Exchange (TSE), is the largest stock exchange in Japan, and the third largest in the world by market capitalization. It is home to 3,769 listed companies, with a combined market capitalization of over $6.3 trillion as of July 2020. This makes the Japanese stock market the most valuable in the world, behind only the US and China.

The Tokyo Stock Exchange is divided into three sections: the First Section, the Second Section, and the Mothers section. The First Section, the main market, is composed of large companies that are listed on the exchange. The Second Section is composed of smaller companies, and the Mothers section is composed of high-growth companies.

The Japanese stock market is highly liquid and active, with an average daily turnover of over 6 trillion yen in 2020. It is also highly diversified, with more than 15 industry sectors represented on the exchange. Investors can access the Japanese stock market through a number of ways, including direct investments, mutual funds, and ETFs.

The Japanese stock market can be a great way for investors to diversify their portfolio and gain exposure to a variety of companies and industries. It also offers a number of advantages, such as low transaction costs, a wide range of products and services, and a highly regulated market environment.

Does the Japanese stock market have cross-ownership?

Yes, the Japanese stock market does have cross ownership. Cross ownership is a type of investment structure in which two or more companies own shares in each other. It is a common practice in Japan, where many companies are part of large corporate families with overlapping ownership.

Cross ownership is typically used as a form of corporate governance and to encourage long-term corporate loyalty. It can also be used to facilitate M&A activity, as well as for tax planning. The cross-shareholding structure can also be used to block hostile takeovers or other unwanted corporate actions.

Cross ownership has been a feature of the Japanese stock market for many years. According to the Organisation for Economic Co-operation and Development (OECD), the practice of cross-shareholding among Japanese firms has increased since the early 2000s. In 2016, the OECD estimated that the total amount of cross-owned shares in the Japanese stock market was approximately 10% of the total market capitalization.

In recent years, the Japanese government has introduced measures to reduce the prevalence of cross ownership. For instance, the Corporate Governance Code, introduced in 2015, encourages companies to reduce their level of cross ownership and improve their corporate governance structure. In addition, the Tokyo Stock Exchange has introduced a “Say on Cross-Shareholdings” system which requires companies to disclose their cross-shareholdings and provide information on the purpose of their cross-shareholdings.

Overall, the Japanese stock market does have cross ownership, although the prevalence of the practice is gradually decreasing. The Japanese government and Tokyo Stock Exchange have taken measures to reduce the prevalence of the practice and encourage more transparent corporate governance.

What is the average dividend yield historically in Japan?

The average dividend yield for Japanese stocks has historically been around 2%. In recent years, this dividend yield has been lower, falling to around 1.5% in 2018. This is partly due to the fact that Japanese companies have become more focused on growth and reinvestment rather than dividends.

However, the dividend yield for Japanese stocks tends to be higher than the dividend yield for stocks in other major markets. For example, the average dividend yield for stocks on the S&P 500 index in the United States is around 1.9%, while the average dividend yield for stocks on the FTSE 100 index in the United Kingdom is around 4.1%.

The dividend yield on Japanese stocks can vary significantly depending on the sector and individual company. For example, stocks in the banking sector tend to have higher dividend yields than stocks in other sectors such as technology and retail. Additionally, some individual companies may have higher dividend yields due to their higher payout ratios.

Overall, the average dividend yield for Japanese stocks has been relatively stable over the last few years and is expected to remain around 2% in the near future.

Is dividend investing more popular in Japan compared to other countries?

Dividend investing is certainly more popular in Japan compared to other countries, and this is due to several factors. For starters, Japan has a strong culture of long-term investing, which is attractive to dividend investors who seek to generate passive income from their investments. In addition, Japan’s low interest rates, which have been pushed down to near-zero levels, have also made dividend investing more attractive for many investors. Finally, Japan’s corporate culture encourages companies to return profits to shareholders in the form of dividends, which further adds to the appeal of dividend investing for Japanese investors.

In Japan, dividend investing has long been a popular way for investors to generate passive income and benefit from the long-term growth of the Japanese economy. Many Japanese companies have long-standing dividend policies, and many of them pay out dividends on a regular basis. Japanese companies also tend to have strong balance sheets, which makes them attractive to dividend investors who seek to benefit from the stability and potential growth of the underlying company.

The low interest rate environment in Japan has also made dividend investing more attractive for investors. With interest rates near-zero, investors have had to look elsewhere for income, and dividend investing is one of the most attractive options. With dividend

Is small caps or large cap better if you invest in dividend stocks in japan?

Japanese small-cap dividend stocks

Japanese small cap dividend stocks are an attractive investment option for many investors looking for a regular income stream from their investments. Small cap stocks, or stocks with a market capitalization of between $50 million and $2 billion, offer investors exposure to a wide range of companies, allowing them to diversify their portfolios and spread risk across the Japanese market. Furthermore, the dividend yield of these stocks can be higher than those of larger companies, making them attractive to income-seeking investors.

The Japanese stock market is dominated by large-cap stocks, as over 90% of the total market capitalization is made up of companies with a market capitalization of over $2 billion. As such, small cap stocks often get overlooked, making them potentially attractive investments for those willing to research and analyze the individual stocks.

In addition to the potential for higher dividend yields, small cap stocks also offer other benefits to investors. These stocks tend to be more volatile than their larger counterparts, providing the investor with the potential for greater capital gains. Furthermore, these stocks can often be undervalued, providing investors with the opportunity to pick up bargains.

When investing in small cap stocks, it is important to do your research and analyze the individual stocks thoroughly. Small cap stocks are often more risky than their larger counterparts, and the potential for capital losses is greater. It is also important to look for stocks with a track record of paying and increasing dividends, as this indicates the company is financially sound and is likely to continue paying dividends in the future.

Finally, it is important to remember that investing in small cap stocks carries more risk than investing in larger companies. As such, it is important to diversify your portfolio and spread your risk across a range of different stocks. This will help to protect your investments should one of the stocks fail.

Overall, Japanese small cap dividend stocks are an attractive option for investors looking for a regular income stream from their investments. These stocks offer the potential for higher dividend yields and greater capital gains, but it is important to remember that investing in small cap stocks carries more risk than investing in larger companies. As such, it is important to do your research, diversify your portfolio and spread your risk across a range of different stocks.

The historical return of Japanese stocks vs Japanese dividend stocks

The historical return of Japanese stocks and Japanese dividend stocks has been generally positive over the long term. On average, Japanese stocks have returned an annualized return of 9.7% since the start of the Nikkei 225 index in 1950. This return is composed of both capital gains and dividends.

Japanese dividend stocks have also had a positive long-term return. Since 1950, Japanese dividend stocks have returned an average of 10.8% per year. This return is composed of capital gains and dividends received from the stocks held.

The difference between the returns of Japanese stocks and Japanese dividend stocks is due to the higher dividend yield of Japanese dividend stocks. As of May 2020, the dividend yield of the Nikkei 225 index was 2.40%, while the dividend yield of the JPX-Nikkei Dividend Index was 3.44%. This higher dividend yield leads to a higher return for dividend stocks over the long term.

In recent years, the performance of Japanese stocks and Japanese dividend stocks has been more volatile due to the effects of the COVID-19 pandemic. In 2020, Japanese stocks were down 10.2%, while Japanese dividend stocks were down 8.9%. However, with the economy slowly recovering, it is expected that both stocks and dividend stocks will return to positive returns over the long term.

FAQ:

– What are the benefits of investing in Japanese dividend stocks?

Investing in Japanese dividend stocks offers several advantages. The stocks provide a reliable income stream through consistent dividend payments, making them a valuable addition to an investment portfolio. Furthermore, there is the potential for stock appreciation, and the diversification benefits help spread risk across different sectors.

– What should investors be cautious about when investing in Japanese dividend stocks?

While Japanese dividend stocks offer attractive features, investors should be cautious about certain risk factors. Japan’s economy heavily depends on exports, and any disruptions in the global economy can negatively impact the stock market. Additionally, government policies aimed at stimulating the economy may introduce volatility. Investors must also be aware of taxation policies associated with Japanese dividend stocks.

– Which Japanese stocks did Warren Buffett invest in?

Warren Buffett has made notable investments in Japanese stocks, including Iscar, Mitsubishi UFJ Financial Group, Itochu, Sumitomo, and Taisei Corporation. Buffett’s interest in the Japanese market stems from his belief in its long-term growth potential, stable economy, and the opportunity to invest in undervalued stocks.