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The current bear market in global stock markets has been extreme given the coronavirus outbreak. Sell-offs by investors have resulted in massive declines as it seems every stock has been hammered.
Yet even during this period where whole economies appear to be shutting down, there are still stocks that could benefit from the “stay home” trend. What’s more, investors want to be paid a dividend while waiting for a market recovery.
For example, in the US investors have been looking to companies such as Netflix and video-conferencing provider Zoom Communications to benefit from the coronavirus-induced shutdown. However, these companies don’t pay dividends.
But what about ideas for investors in Hong Kong? Even though the stock opportunities might not be as clear-cut, there are still some that could benefit. Plus, they have an income angle for dividend investors.
Here are two “stay home” dividend stocks listed in Hong Kong that I think will still hold up in this new normal.
1. HKT Trust
With any investment during uncertainty, you want to own a stock that provides an essential service. For that, look no further than HKT Trust and HKT Ltd (SEHK: 6823). The company operates the mobile telco brands 1010 and csl in Hong Kong. It also provides home broadband services to the city’s residents.
The firm has been growing at an impressive rate. Its latest full-year results for 2019 saw profit attributable to shareholders increase 8% year-on-year to HK$669 million (US$86.2 million).
With an increase in people staying at home and consuming more data – either via mobile or at home – HKT Trust’s services will continue to be used. In fact, it could even see an increase in revenue and profits if it can sign up additional users during this period.
At the time of writing, the trust’s stapled shares trade at HK$9.88 apiece, offering investors a juicy 7.1% dividend yield.
2. Guangdong Investment
Guangdong Investment Ltd (SEHK: 270) is a water utilities operator and provides the majority of Hong Kong’s water. It’s also involved in sewage treatment, water distribution, and property as well as department stores.
Thankfully for investors, the water resources part of its business makes up the bulk of revenue and operating profit. For the first half of 2019, the company saw 64% of its operating profit come from its water resources division.
What’s more, its dividend growth rate has been phenomenal. Over the eight years from 2010-2018, the company saw its dividend per share grow at a compound annual growth rate (CAGR) of 17.2%.
With people quarantining themselves at home and “social distancing” becoming more common, everyone still needs to consume water. For investors, this could be an under-the-radar stock that could benefit from this trend.
At the time of writing, Guangdong Investment’s shares trade at HK$13.28, offering investors a 4.1% dividend yield.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Tim Phillips doesn’t own shares in any companies mentioned.