KDDI Corp (9433 JP)

(A Top Pick June 11/14. Up 53.07%.) There are 3 Japanese telcos and they don’t compete particularly hard. Japan is just in the early stages of the smart phone rollout, so they are still seeing good growth. He continues to like this name.

Something that he likes in the market right now is Japanese companies starting to get interested in returning cash to shareholders. This one has doubled its dividend in the last 5 years, and he thinks they can do it again in the next 5 years. Like many telcos, there is not a ton of top line growth, but smart phone penetration is way behind North America, so they still have a pretty good ramp in terms of data demand.

A Japanese telecom. One of his biggest challenges is finding good dividend growing investments at an attractive price. There has been so much money chasing yield for so long. The single most important thing with any stock is price and where it stacks up to value. This company has a very strong operating profit growth profile and a very strong dividend growth profile, and is trading at about 80% of what he thinks its shares are worth. Japanese telco industry does not have a lot of cutthroat price competition. Japan, as a market, is more and more interesting. Prospects of sustained growth are good. There are strong prospects that the national pension system will have to significantly alter their asset mix to get out of bonds.