Defensive Dividends in a Volatile World: Why Asian Terminals and C&D International Are Top Picks for Income Investors

As geopolitical tensions and interest rate uncertainty roil global markets, income investors face a critical dilemma: how to generate steady returns without compromising on safety. Traditional fixed-income assets like bonds offer paltry yields, while high-yield dividend stocks provide a compelling alternative—if they can withstand macroeconomic headwinds. In Asia, two companies stand out as exemplars of sustainable income generation amid turbulence: Asian Terminals (PSE:ATI) and C&D International (SEHK:1908). Both boast dividend yields above 6%, but their fundamentals diverge in ways that demand scrutiny. Here's why investors should prioritize one—and tread carefully with the other.

The Case for Asian Terminals (ATI): Stability in Infrastructure

Asian Terminals, a Philippine logistics giant, offers a 6.4% dividend yield as of June 2025, backed by 10 years of uninterrupted dividend growth and a conservative 45% payout ratio. The company's Q1 2025 results underscore its resilience:
- Revenue rose 10% year-over-year to $1.14 billion, driven by surging demand for aerospace and defense materials.
- Net income jumped 47%, with EPS hitting $0.67—a testament to operational efficiency.
- A $700 million share buyback program (with $520 million remaining) signals confidence in its cash-generating prowess.

Why it's a defensive play:
- Low payout ratio: ATI's dividends are comfortably covered by earnings, with a cash payout ratio of 70.3%, ensuring sustainability even if earnings dip.
- Sector resilience: Ports and logistics are essential services, insulated from cyclical downturns. The company's exposure to Philippine infrastructure projects adds a growth tailwind.
- Valuation caution: While shares rose 20% in early 2025, ATI remains undervalued relative to its peers, offering a margin of safety.

C&D International (1908): High Yield, High Risk

C&D International, a Hong Kong-based real estate and investment firm, boasts a 7.7% dividend yield—the highest of the two—but its fundamentals are murkier. Key takeaways:
- Payout ratio of 47.3%: While still manageable, this is higher than ATI's, and dividends were cut in 2024 (to HK$1.20/share from HK$1.30).
- Sector-specific risks: Its reliance on China's property market exposes it to regulatory shifts and a slowing economy.
- Debt concerns: A debt/equity ratio of 87.6% elevates refinancing risks amid rising global rates.

Why it's a double-edged sword:
- Volatility in dividends: C&D has paid dividends for only 8 of the past 10 years, with recent insider selling (HK$4.4 million in April /2025) signaling caution from insiders.
- Valuation upside: Analysts rate the stock 22% undervalued, but execution risks in China's property sector could derail recovery hopes.

ATI vs. 1908: A Tale of Two Dividend Strategies

Metric	Asian Terminals (ATI)	C&D International (1908)
Dividend Yield	6.4%	7.7%
Payout Ratio	45% (stable)	47.3% (cautious)
Cash Flow Coverage	70.3%	62.8%
Macro Risks	Philippine infrastructure	China property slowdown
Shareholder Returns	Buybacks + dividends	Dividends only

Key Takeaway: ATI's lower yield but higher safety makes it the clear choice for conservative income seekers. C&D's higher yield comes with sector-specific execution risks, making it suitable only for investors willing to bet on a rebound in Chinese property.

Why These Stocks Beat Bonds

With U.S. 10-year Treasury yields hovering around 4% and global bonds offering minimal inflation protection, high-yield equities like ATI and C&D provide superior income and growth potential. Both companies:
- Offer dividend yields 50–70% higher than most sovereign bonds.
- Benefit from cash flow visibility: ATI's infrastructure exposure and C&D's refinancing plans (if successful) ensure consistent payouts.

Investment Thesis: Prioritize Quality Over Yield

1. Buy Asian Terminals (ATI): Its rock-solid balance sheet, stable payout ratio, and defensive sector position make it a top-tier dividend stock.
2. Tread carefully with C&D (1908): While its yield is tempting, the stock requires active monitoring of China's property policies and debt management.
3. Avoid yield traps: Focus on companies with cash flow coverage above 60% and payout ratios below 50% to avoid dividend cuts.

Conclusion

In an era of geopolitical and monetary uncertainty, income investors must prioritize capital preservation without sacrificing yield. Asian Terminals exemplifies this balance, offering a defensive dividend machine with room to grow. C&D International, while tempting, demands a higher risk tolerance. As the adage goes: “Don't let yield blind you to risk.” For most portfolios, ATI is the safer bet, while C&D belongs in a smaller speculative allocation.

Invest wisely—quality beats yield when the world gets rocky.