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3Q Update: Top 3 STI Components With High Yields!
Aspire, Hot Picks | 18 September 2015
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By: Raymond Leung
Articles (142) Profile

Last quarter, an article was written on the top three yielding counters on the Straits Times Index (STI),  based on the yield monitor report of the Singapore market from OCBC Investment Research (OIR). OIR has released a report for the third quarter.

In the latest report, we saw that the top two components (Hutchison Port Holdings Trust & Ascendas REIT) retained their position in the list while Keppel Corporation (KEP) was pushed down to fourth place by Noble Group (NOBL).

Source: Top 3 STI stocks based on yield, OCBC Investment Research

1)    Hutchison Port Holdings Trust
Hutchison Port Holdings Trust (HPHT) has triumphed once again as the top yielding component on the STI despite the fall in yield. Yield for the counter fell from the previous 9.1 percent to the current 7.3 percent. This came despite the fall of the price of HPHT from USD 0.63 to USD 0.555 due to increasingly difficult operating environment.

Source: Hutchison Port Holdings Trust’s 5 Years Dividend History, Financial Times

The first year forecasted yield for HPHT is expected to increase from the current 7.3 percent to 8.1 percent. Sentiments towards this counter remain largely the same with four “Buy”, ten “Hold” and two “Sell”. Analysts from OIR gave the counter a “Hold” call but with a potential upside of 21.4 percent.

2)    Ascendas REIT
Singapore’s first business park and industrial REIT, Ascendas REIT (AREIT), failed to edge up in position from the last quarter. This is despite of the fall of yield from HPHT and the raise in yield of AREIT from 6 percent to 6.6 percent. However, price for the counter fell from $2.42 to $2.19.

Source: Ascendas REIT’s 5-year Dividend History, Financial Times

Currently, the yield of AREIT stands at 6.6 percent and is expected to rise to 7 percent in the next year. Calls from the street is turning bullish towards the counter as it has 11 “Buy”, 12 “Hold” and two “Sell” calls up from the previous quarter’s seven “Buy”, 14 “Hold” and  four “Sell” calls. Analysts from OIR reiterated their “Hold” call and a price target of $2.49

3)    Noble Group
Troubled commodities trader, Noble Group (NOBL), unexpectedly made the list of top yielding STI counters. Maybe we can call it a “blessing” in disguise? This came after attacks from short sellers caused the counter to fall more than 60 percent from its 52-weeks high. Yield is expected to increase to 6.4 percent for the year ahead.

Source: Noble Group's 5-year Dividend History, Financial Times

Dividend might fall as NOBL faces liquidity issues from its shares buyback scheme in attempt to salvage the price fall due attacks from short sellers. However, given the fact that the dividend is declared in USD, investors may stand to receive a higher dividend in SGD as exchange rates are favourable towards USD.

Despite attacks from short sellers, the general sentiments from analysts towards NOBL did not turn bearish. NOBL received a total of 14 calls with five “Buy”, eight “Hold” and one “Sell”. Analysts from Macquarie Research reiterated their support for NOBL by maintaining their “Buy” call with a potential upside of 193.5 percent.

Disclaimer: The writer of this article is vested with interest in Noble Group.

Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

Hutchison Port Hldgs Trust US  0.220 -0.005 -2.22%   
Business: Co invests in, develops, operates and manages deep-water container ports in the Pearl River Delta.

Insight: Apr-19, 1Q19 revenue inched up 0.3% as combined co... Read More
Ascendas REIT  3.000 -0.03 -0.99%   
Business: Co invests in the real estate markets of Singapore and Australia.

Insight: Apr-19, FY19 gross revenue and NPI inched up 2.8% ... Read More

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