Many investors look to the so-called BRIC nations (Brazil, Russia, India and China) for emerging growth opportunities. However, these investors may be overlooking one emerging powerhouse in Southeast Asia.

Overall, as an investor, I particularly like emerging-market dividend stocks for 2013. Companies in the MSCI Emerging Markets Index have increased dividend payments steadily for the past 10 years. Unlike earnings, dividend payments have been far steadier, with payout ratios mostly in the 30% to 40% range.

Additionally, as many of these companies mature, the potential to increase dividend payouts is high — companies in emerging markets often have lower debt levels than firms in developed markets. The number of emerging stocks with high dividend yields in the MSCI World Index has increased from 60 in 1995 to more than 300 last year.

But one Southeast Asian country is especially ripe for growth. Driven by exports, the country’s GDP is at its highest level in decades, with growth well beyond 6% in 2012.#-ad_banner-#

There are several reasons why this country is one to watch.

Along with political stability, it has is a young workforce: Half of the population is less than 24 years old. In addition, English is the country’s second most dominant language.

These factors are why I think the Philippines will outperform the Southeast Asia region and enjoy strong growth this year and beyond. The Philippines’ economy is the world’s 40th largest, according to the International Monetary Fund — but it is projected to reach the top 20 in the next 20 to 30 years.

The Philippines has been transitioning from an agricultural economy to one more focused on services and manufacturing. Its political stability, youthful workforce and prevalence of English are ideal for companies already setting up business process outsourcing centers there. And the trend isn’t slowing down.

One of my favorite plays in this country is a high-yielding telecommunications company, PLDT (NYSE: PHI). Established in 1928, the Philippine Long Distance Telephone Co. is the largest telecom in the Philippines and one of its largest and most traded stocks. The company has been strong in recent years, increasing revenues annually. Its policy is to declare a regular dividend of 70% of core earnings per share and a special dividend whenever possible. It has EBITDA margins of 46%, a price-to-earnings ratio of 17 and a cash dividend yield of 5%.

PLDT has three operating segments: wireless, fixed line, and Internet and communications technology.

Nearly 60% of the Philippines’ population owns cellphones, and the wireless segment is PLDT’s core business. A 10% increase in wireless subscribers brought its share of the country’s mobile market to 68% at the end of 2012. The company’s wireless revenues grew at an industry-leading 15% during the year.

PLDT’s fixed-line division focuses on data and other network services, as well as information and communications infrastructure and services for Internet applications.

The company’s Internet and communications technology division has focused on business process outsourcing and communications infrastructure; it also provides services for Internet applications and multimedia content delivery

In its most recent quarter, the company reported adjusted net income of $189 million, with operating cash flow increasing to $646 million. Gross profits increased to $3.4 billion from $3 billion in 2011, and net income was up 20%, to $862 million.

Risks to Consider: Foreign exchange risk is at play with international stocks, and currency fluctuations could impact returns. With 88% of its debt priced in U.S. dollars, depreciation against the peso could impair profitability because of higher interest payments. With 50 million mobile phone subscribers in the Philippines, the market is approaching maturity. As a result, the company’s growth will come to a screeching halt unless it stays innovative.

Action to Take –> With a solid, growing dividend of 5%, PLDT is a good buy up to $75. This stock has seen tremendous growth in the past decade, and I think the best is yet to come. A gain of more than 25% in the next 12 months wouldn’t surprise me.

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