Chunghwa plans to draw investors with high dividend yield

In a bid to counter negative sentiment towards telecom stocks, the international privatization of Taiwan''s Chunghwa Telecom is to be marketed as a defensive sectoral and country play.

Contrary to most international equity markets, where high growth tech and telecom stocks often pay no dividend at all and low growth utility stocks tempt investors with a high dividend, Chunghwa Telecom is planning to offer investors an 8% dividend yield.

At this level market observers say that the yield will equate to 85% of net income, with the company further guaranteeing a dividend yield equating to a minimum of 50% of net profits in future years. For Chunghwa, this presents little in the way of a problem, since it has traditionally paid a high cash dividend to the government. Indeed, over the past three years the company...

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