Historically, Asian stocks have ranked among the lowest-paying dividend issues in the world. But since last year that trend has changed as once low-yielding markets in the region now provide higher payouts than the S&P 500 Index and in some cases, many European equity markets.

Asia, unlike major Western markets, already suffered from an economic depression in 1997-1998 as country after country rolled over as a massive currency and debt crisis smashed into the region. Asia’s quick response to the crisis, mainly China, combined with easy credit financing from the West helped to lessen the severity and duration of the blow.

Currently, the FTSE Asia-Pacific Large-Cap Index (excluding Japan) yields 3.8% while the Tokyo Nikkei yields 2.7%. Both sectors yield more than local government bond markets. The S&P 500 Index currently yields 3% or slightly below the yield on benchmark ten-year Treasury bonds.

Amazingly, Japanese stocks for years barely yielded 1% until the Nikkei began to hemorrhage starting in 2004; increasingly, many Japanese large and small-cap companies have boosted dividends over the last five years, including share buybacks. Some world-class companies in Japan continue to pay attractive dividends, including Canon (3.4%), Nintendo (5.5%), Nippon Oil (3.6%) and Tekeda Pharmaceuticals (4.8%).

Ten years ago Asian equities paid pitifully low dividends following the bull market in the late 1990s. But two major bear markets this decade have brought stock values back down to Earth; as share prices have declined most companies – including financials -- have maintained or even increased their dividends in the region.

What’s truly amazing is how for many decades the United States continued to raise dividend payouts while emerging markets paid little or nothing to shareholders. Now that trend is changing amid the worst credit deflation in 75 years as banks and other companies chop or eliminate dividends to conserve cash.

Dividends in the MSCI Asia Pacific Index are derived from companies in 14 countries with the top ten dividend-paying stocks accounting for about 20% of total dividends paid. In contrast, the top ten dividend stocks in the S&P 500 Index accounted for almost 33% of all dividends paid by that index in 2007.

According to research compiled by the Matthews Asia Pacific Equity Income Fund, between 2002 and 2007 dividends paid by the constituents in the MSCI Asia Pacific Index grew at a compounded annualized rate of 24% compared with 10% for the S&P 500 Index. That trend is accelerating since 2008 as Asian stocks maintain or boost payouts while American companies reduce or eliminate them altogether.

At some point in the future it’s inevitable that currencies in Asia will be revalued vis-à-vis the American dollar. That makes dividend investing in the Pacific even more compelling as the total return equation grows more rewarding for long-term investors.