Posted by I bet you can find a lot of Japanese products in your house. Although we use many of these products every day, we may not have thought of investing in their stocks.
I just picked 10 of the familiar brands for this post. You might even have these brands in your home. But not all of them are doing well because familiar brands may be matured and lack growth areas that can increase their sales and earnings further. So use this list as a starting point to generate your initial ideas but you need to analyse them on a case-by-case basis to evaluate their investment merits.
#1 – Nintendo (TSE:7974)
I have a Nintendo Switch and I love it. This product has single handedly driven the growth for Nintendo in the past few years. It is also a testament of the company’s innovation and prior to Switch, Wii was also an avant-garde product in the gaming world.
Nintendo Switch contributed 86% of the total revenue in 2019. Switch should be able to grow in the next few years but Nintendo would need another blockbuster product to replace Switch eventually, as every console has a lifespan.
The dividends per share has grown from 150 yen to 1,090 yen over the past 5 years and that’s an annual growth rate of 64%!
The share price has also done very well, gaining 139% over the past 5 years.
#2 – Meiji (TSE:2269)
Hello Panda and Yan Yan are popular childhood snacks. They are also comfort food for adults. Admit it. Besides food products, Meiji produces pharmaceutical products such as antibiotics and anti-depressants. The pharmaceutical segment contributed about 16% to the revenue.
Meiji’s dividends per share has grown from 50 yen to 140 yen over the past 5 years, or at a compounded annual growth rate of 29% per year.
However, the share price wasn’t that inspiring with just 15% gain in the past 5 years. One of the possible reasons was that the earnings have been flat and that means that Meiji gave out a larger proportion of the earnings as dividends over the years.
#3 – Nissin Foods (TSE:2897)
I visited the CupNoodles Museum at Osaka, Japan and learned about the history of instant noodles. It was invented by Momofuku Ando post-World War II when Japan was suffering from food shortage. Ando wanted to invent noodles with a long shelf life to help alleviate the situation. He succeeded and commercialised the first instant noodles in 1958.
Nissin Foods’ 2019 annual report looks like a manga, at least for the first few pages.
Nissin Foods has businesses all around the world with the Americas contributing the largest revenue outside Japan.
Nissin Foods have raised its dividends per share from 80 yen in 2016 to 110 yen in 2020. That’s an 8% compounded annual growth rate.
The share price performance was a decent 78% gain in the past 5 years.
#4 – Kikkoman (TSE:2801)
Kikkoman is a soy sauce producer which uses a unique dispenser. In fact, the bottle design is a registered trademark. The bottle perhaps enjoys more fame that the soy sauce. I wouldn’t be able to identify the sauce in a blind test but I can associate the bottle shape to Kikkoman even without the label.
It was amazing to know that Kikkoman sells more soy sauce to the rest of the world than in Japan.
Kikkoman has grown the dividends from 32 yen in 2016 to 42 yen in 2020, or at a 7% compounded annual growth rate.
The share price has gained 35%, pretty in line with the growth in dividends per share.
#5 – Asahi (TSE:2502)
Touted as Japan’s number 1 beer. I admit I do like the ‘dryness’ aftertaste feel.
But they do not just sell beer. They have soft drinks, food products and some international brands such as Peroni and Pilsner Urquell (good stuff!) which they have acquired over the years.
Below is the breakdown of the Asahi’s revenue into various segments.
The dividends per share has grown from 50 yen to 100 yen, or at a 19% compounded annual growth rate.
The share price has only gained 6% over the past 5 years.
#6 – Suntory Food and Beverages (TSE:2503)
Japanese whisky has made a mark in an otherwise Scot-dominated industry. Yamazaki and Hibiki are the top Japanese whisky brands and prices have shot through the roof due to a lack of supply. Both brands are under Suntory.
But Suntory made most of the money from non-alcoholic beverage and food, which constituted 56% of the total revenue. This is a diverse segment ranging from soft drinks to even tonics such as Brands’ essence of chicken.
Suntory grew its dividends per share from 68 yen to 78 yen, or at a compounded annual growth rate of 3%.
Suntory share price has declined 8% over the past five years, largely due to its rather flat earnings.
#7 – Lion Corp (TSE:4912)
Lion Corp invaded our bathrooms and kitchens with its Shokubutsu and mama Lemon.
In fact, beauty care and living care products only contributed 19% of the total revenue. Lion Corp made most of the money from fabric care (detergents – Softlan, TOP, etc) and oral care products (toothpaste – Systema, Dent, etc).
Lion Corp has grown the dividends per share from 10 yen in 2015 to 21 yen in 2019, at a compounded annual growth rate of 20%.
Lion Corp share price has risen 169% in the past 5 years!
#8 – Pilot (TSE:7846)
I believe every school goer would know the Pilot brand. From markers to pens to mechanical pencils, they have dominated the stationery market for decades.
Pilot Corp has sold stationery to the entire world. Half of the revenue comes from Asia with Japan having the largest share. Europe and the Americas are sizable markets as well. A truly global company!
Dividends per share has grown from 21 yen to 45 yen in the past 5 years, or at a 21% compounded annual growth rate.
But the share price didn’t do well with a 24% loss in a 5-year period. This is surprising since the dividends have grown. I suspect it is due to bad earnings reported in 2019, which was a 13% decline from the previous year.
#9 – Tokio Marine (TSE:8766)
My family has held some Tokio Marine policies for years and I believe some of you might have it as well. I just learned that they are part of the giant Mitsubishi Group.
Tokio Marine derives more revenue from non-life insurance and majority sales are done in Japan.
Tokio Marine increased its dividends from 95 yen to 250 yen over the past 5 years, at a compounded annual growth rate of 27%.
The share price didn’t do as impressively as the growth in dividends, gaining only 15% in the past 5 years.
#10 – Yamaha Corp (TSE:7951)
What products come to mind when someone mentions Yamaha? Depends on who you ask. You would either get music instruments or motorcycles. I am not sure where’s the synergy between the two and it is pretty unusual for a company to be doing both seemingly unrelated businesses. Maybe that’s the reason why Yamaha Motor was spun off from Yamaha Corp in 1955. Hence Yamaha Corp’s main business is related to music and nothing about bikes.
Besides music instruments, audio equipment contributed about 28% of the revenue. The audio equipment segment includes products such as digital mixing systems and speakers.
Yamaha Corp increased the dividends from 36 yen to 60 yen. That’s a compounded annual growth rate of 14%.
The share price has also gained 119% over the past 5 years.
Conclusion
You should find these brands familiar. Despite growing their dividends, not all of these stocks have done well. Those that didn’t perform have seen a dip in their earnings. The companies had to distribute a bigger proportion of the earnings as dividends to keep increasing the payout.
If you have held these 10 stocks in a portfolio at equal proportion, the combined performance over the past 5 years would be 58%. This is a very decent return for many investors. Not that shabby after all considering Japan as an economy has not been growing for the past decades.
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