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Impact Of Dividends On Long Term STI Gains
Perspective | 05 November 2013
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By:

This article is written by Geoff Howie from the Singapore Exchange (SGX). Geoff is widely known for providing insightful investment analysis and this article is republished with permission from SGX My Gateway.

The Straits Times Index (STI) returns over the past 12 months have been in line with its longer term annualised gains. The STI generated an 88.1 percent price gain in the ten years ending October 2013. This makes a 6.5 percent average annualised price gain. Including a 3 percent dividend yield, the total return comes to 9.5 percent. The SPDR STI ETF was established more than 10 years ago and has returned 9.6 percent over the same period – the ETF distributes dividends twice a year. Meanwhile in
Singapore, the mean inflation rate over the past ten years has been near 2.5 percent, according to Trading Economics, while property prices have gained 6.7 percent.

These are two costs that have some effect on most of us and the total returns of the STI has more than kept up with it. Internationally, the strength of the Singapore Dollar (SGD) over the past 10 years means that on an SGD basis, the average annualised price return of the Dow Jones Index came to 1.2 percent, while the Nikkei 225 returned 2.4 percent.

As the STI is well diversified with companies operating a wide range of businesses to an extensive range of customers across the region, the 10 year returns of those current STI stocks that have been listed for ten years are varied and this has assisted in stabilizing the index. The way that a free float weighted index works is that if one stock declined 10 percent over the period, yet two other stocks with equal index weighting of that stock gained 5 percent over the period – the index would
remain unchanged.

Of the current 30 STI stocks, 80 percent or 24 were listed 10 years ago. Of these 24 stocks, all generated an average annualised total return over the past 10 years – these returns ranged from +3.8 percent for Singapore Airlines on an annual basis to +27.2 percent for Golden Agri Resources. Note that dividends made the difference for the annualised return of Singapore Airlines. The five stocks that saw its average annual total returns over the ten years boosted the most by dividends were Singapore Press Holdings, SIA Engineering, Singtel, Singapore Exchange and the Real Estate Investment Trust, CapitaMall Trust.

The mean total return of these 24 companies was 16.2 percent while the average total return was 15 percent. STI stocks that generated a total return more than 20 percent on an average annual basis over the past 10 years were Golden Agri Resources, Sembcorp Marine, Jardine Cycle & Carriage, Jardine Strategic Holdings, Singapore Exchange, Genting Singapore, Jardine Matheson Holdings and Keppel Corp. Note that Jardine Strategic Holdings and Jardine Matheson Holdings are denominated in US Dollars, however their returns in this table are based in SGD.

Singapore Airlines  9.170 +0.01 +0.11%   
Business: Co provides air transportation services to destinations spanning a network spread over 6 continents. [FY19 Turnover] SIA (80%), Budget Aviation (10.5%), SilkAir (6.2%), SIAEC (3.1%), others (0.2%).

Insight: May-19, FY19 revenue edged up 3.3% to $16.3b. Pass... Read More
Golden Agri-Resources  0.210 -- --   
Business: Co is engaged in cultivating & harvesting oil palm trees, processing fresh fruit bunches (FFB) into crude palm oil (CPO) & palm kernel (PK), & refining CPO into industrial & consumer pdts.

Insight: May-19, 1Q19 revenue fell 11% due to softer crude ... Read More
Singapore Press Hldgs  2.130 -0.03 -1.39%   
Business: Co is S'pore's main newspaper & magazines publisher that also has investment in properties. [FY18 Turnover] Media (66.7%), property (24.7%), others (8.6%).

Insight: Apr-19, 1H19 operating revenue fell 3% to $477.6m ... Read More
SIA Engineering Co  2.580 -0.03 -1.15%   
Business: A leading aircraft maintenance, repair and overhaul (MRO) company providing total maintenance solutions to a client base of international airlines. [FY18 Turnover] Airframe and Line Maintenance (97.5%), Engine and Component (2.5%).

Insight: May-19, FY19 revenue was 6.8% lower at $1b largely... Read More
Singtel  3.160 -0.01 -0.32%   
Business: Asia's leading communications group. [FY19 Turnover] Mobile Comm (31.1%), Data & Internet (19.2%), Infocomm Technology (17.5%), Sale of Eqmt (16.5%), Digital Biz (7.2%), Fixed Voice (5.2%), Pay-TV (2.1%), Leasing (0.8%), others (0.4%).

Insight: May-19, FY19 operating revenue remained flat at $1... Read More
Singapore Exchange  8.220 -0.04 -0.48%   
Business: [FY18 Turnover] Equities & fixed income (48.2%), derivatives (40.2%), mkt data & connectivity (11.6%).

Insight: Jan-19, 1H19 operating revenue increased 5.7% to $... Read More
CapitaLand Mall Trust  2.630 -- --   
Business: Co owns and invests in quality income-producing assets which are used, or predominantly used, for retail purposes primarily in Singapore.

Insight: Apr-19, 1Q19 gross revenue and NPI rose 10% and 11... Read More
Sembcorp Marine  1.200 -0.020 -1.64%   
Business: Co is a leading global marine & offshore engineering group. [FY18 Turnover] rigs & floaters, repairs & upgrades, offshore platforms (98.8%), ship chartering (1%), others activities (0.2%).

Insight: May-19, 1Q19 revenue fell 31.3% to $810.6m due to ... Read More
Jardine Cycle & Carriage  30.130 -0.24 -0.79%   
Business: Co is mainly engaged in the mfr, assembly, distribution, and retailing of motor vehicles and motorcycles in S'pore, M'sia, Indonesia, and Vietnam.

Insight: Apr-19, 1Q19 revenue rose 1.6% due to higher reven... Read More
Jardine Strategic Hldgs  29.540 -0.46 -1.53%   
Business: [FY18 Turnover] Astra (50.2%), Dairy Farm (34.5%), Hongkong Land (7.8%), Jardine Cycle & Carriage (5.7%), Mandarin Oriental (1.8%).

Insight: Feb-19, FY18 revenue rose 10.5% driven by strong p... Read More
Genting Singapore  0.925 +0.005 +0.54%   
Business: Develops, operates & mkts casinos & IRs globally, including Australia, M'sia, Philippines & UK. [FY18 Turnover] Gaming (66.1%), non-gaming (33.8%), others & invs (0.1%).

Insight: May-19, 1Q19, despite Co's non-gaming business reg... Read More
Jardine Matheson Hldgs  53.600 -0.70 -1.29%   
Business: [FY18 Turnover] Astra (35.7%), Dairy Farm (23.7%), Jardine Motors (17.2%), Jardine Cycle & Carriage (7.9%), Jardine Pacific (7.4%), HK Land (5%), Jardine Lloyd Thompson (2.1%), Mandarin Oriental (1%).

Insight: Feb-19, FY18 revenue rose 9.8% with strong perform... Read More
Keppel Corp  5.960 -0.02 -0.33%   
Business: [FY18 Turnover] Infrastructure (44.1%), offshore & marine (O&M) (31.4%), property (22.5%), investments (2%).

Insight: Apr-19, 1Q19 revenue rose 4.1% underpinned by high... Read More


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The Shares Investment editorial team welcomes constructive feedback on our coverage and content. We would also be delighted to answer any questions on the above article. Leave us a comment below, and we'll get back to you shortly!

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