Earn 8% Dividends From the Jewelry Business — Plus Special Payouts

There are three large and well-known jewelry specialty retailers listed in Hong Kong: Chow Tai Fook (CTF) (1929.HK), Chow Sang Sang (CSS) (0116.HK), and Luk Fook (LF) (0590.HK). All three companies have underperformed in the past year, with losses between 17% and 27%. In comparison, the Hang Seng Index has risen 34% over the same period. Despite the drop in share prices, these companies now offer attractive dividend yields ranging from 7.9% to 9.4%.

Among the three, Chow Tai Fook is the largest in terms of revenue and market capitalization. Not only is it larger, but it is several times bigger—CTF’s revenue is approximately three times that of CSS and seven times that of LF.

Likely due to its market leadership, CTF stock trades at a premium compared to its competitors. While CSS and LF trade at single-digit P/E ratios and below 1x P/B ratios, CTF commands a valuation of 2.7x its book value and a P/E ratio of 16x, even after a 27% decline in its share price over the past year.