Is Coach the Best Way to Profit from China's Growth?

South Korea may its own, new handbag museum -- but if you want to see those women's accessories in action in an Asian market, look to China.

Luxury goods companies such as Ralph Lauren RL, Michael Kors KORS and Mercedes Benz DDAIF count on China for increasing sales. And among the most desired items by Chinese consumers are handbags and other accessories from Coach Inc (NYSE: COH).

A luxury leather designer and maker, Coach has more than 300 locations in Asia. But in the Asian market China is, by far, the most important for the growth plans of Coach. For the most recent quarter, Coach registered 40 percent growth in annual sales in China. For North America, it was only 1 percent annual growth. As a result, Coach is moving to greatly increase both its store and e-commerce presence in China.

That fits in well with the evolving economy in China.

As detailed in a previous article in Benzinga, the Chinese economy is changing to respond more to consumer demand. Urbanization in China will also increase the consumer class -- meaning there should be many more customers for Coach products.

The shareholders have certainly been patiently waiting.

In a double-digit bull market, Coach is up just two percent for 2013. What is bullish about Coach are many of its financials. The profit margin is over 20 percent. The return-on-equity is more than 45 percent. The balance sheet is clean with no debt, which is always appealing.

What is also attractive about Coach is its dividend.

The average dividend yield for a member of the Standard & Poor's 500 Index is around 1.9 percent. Coach has a dividend yield of almost 2.50  percent. The company also has a history of increasing its dividend.

Coach shareholders can collect an increasing dividend while waiting for growth in China to take the share price higher.

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