Despite returns north of 40% over the past year, Russian large cap stocks continue to offer substantial dividend yields and attractive valuations. Compared to other emerging markets, Russian dividend yields are substantially higher, while valuations are several multiples lower. Russian equities also compare favorably to U.S. large cap equities based on those metrics.

Russia Exhibits Higher Dividends at a Lower Valuation

Source: Factset.

Russia's Earnings and Dividend Yields Nearly Doubled

Source: Factset.

Russia’s suppressed valuations are largely a result of geopolitical issues weighing on investor sentiment. At the same time, Russia’s corporate earnings have more than doubled since the start of 2017. Investors may consider adding Russia to their broad emerging markets exposure as a way to enhance income potential without overpaying.

About the Author:

Denis Zinoviev serves as an Associate Product Manager for Equity and Fixed Income ETFs at VanEck in the United States. His current responsibilities include product development, market research, and product support. Prior to joining VanEck, he held a Product Development position at FactSet Research Systems, where he was responsible for product development and implementation of Portfolio Analysis applications. He holds a Bachelor’s degree in Economics & Finance from Bentley University in Boston.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.