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STI Dividends Beat House Prices And Interest Rates In 2013
Perspective | 14 January 2014
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Last year, the dividend yield of the Straits Times Index (STI) came in higher than broad measures for fixed income returns and housing prices.

Dividends are distributions of profits paid out regularly (quarterly, semi-annually or annually) by a company to its shareholders. Dividend yield is the ratio used to measure the dividend return you earn from investing in a company’s stock. It is also a useful measure for comparing returns across your different investments.

All 30 STI constituents were profitable in their last reported financial year and all 30 STI companies maintain a dividend yield. This quarter, 23 constituents will report results for their 2013 financial year – check the economic calendar (click here) for updates.

The STI dividend performance is based on the 2.7 percent yield of the SPDR STI Exchange Traded Fund (ETF) in 2013 versus the TR/SGX SINGAPORE Fixed Income Total Return Index (-2.5 percent) and the Urban Redevelopment Authority Property Price Index by residential type (+1.2 percent on flash estimates).

While this difference in 2013 was modest – the profits earned from the investment in STI each year, help to offset the impact of negative or flat annual performances of those companies. For investors who choose to reinvest the dividends into more shares of the company, they will make compound returns, i.e. earn dividends on dividends.

STI Stocks With The Highest Indicative Dividend Yield
Not all STI companies have a three percent dividend yield – some are higher and some are lower. The five STI constituents that currently maintain the highest indicative dividend yields within the STI are Hutchison Port Holdings, CapitaMall Trust, SingTel, StarHub and SIA Engineering. These five constituents are detailed in the sub-table below.

Hutchison Port Holdings (HPH) Trust is the first publicly traded container port business trust which invests in the market leader of the world’s largest trading hub by throughput, the Pearl River Delta, which consists of two of the world’s busiest container port cities by throughput – Hong Kong and Shenzhen, China. Among the STI stocks, HPH Trust currently maintains the highest indicative dividend yield of 7.1 percent.

CapitaMall Trust (CMT) is backed by CapitaMalls Asia Limited and invests in income-producing assets that are predominantly used for retail purposes primarily in Singapore. Its portfolio comprises of more than 2,700 leases with local and international retailers and 16 retail malls spread across suburban and downtown core of Singapore. CMT currently maintains the second highest dividend yield of 5.5 percent among the STI stocks. SingTel currently maintains a dividend yield of 4.7 percent. Headquartered in Singapore, SingTel has a market capitalisation of $56.1 billion. The telecommunications company provides a range of services including broadband internet, mobile and fixed line voice and data. According to its FY12 annual report, the company derived 63 percent of its revenue from Australia and the rest from Singapore.

StarHub currently maintains a dividend yield of 4.6 percent. With a market capitalisation of $7.2 billion, StarHub delivers a range of information, communications and entertainment services over fixed, cable, mobile and internet platforms.

SIA Engineering currently maintains a dividend yield of 4.4 percent. SIA Engineering provides line maintenance and technical ground handling services to over 200 flights into and out of Singapore Changi Airport each day for more than 60 international passenger and cargo carriers. It provides airframe and component repair and overhaul services for commercial aircraft.

The following table lists the STI constituents sorted by indicative dividend yield. The indicative dividend yields ranges from 0.7 percent to 7.1 percent. The average indicative dividend yields of the 30 stocks was three percent while the median indicative dividend yield was 2.7 percent. Out of the 30 STI constituents, 12 stocks currently maintain indicative dividend yields higher than the STI average of three percent.

Yields above three percent

Yields below three percent

There are two ETFs that track the Straits Times Index (STI) listed on SGX – the Nikko AM Singapore STI ETF and SPDR® STI ETF ETFs. ETFs are open-ended investment funds but are listed on and traded on an exchange. ETFs aim to track the performance of an index and provide access to a wide variety of markets and asset classes. Investors can either trade the two ETFs on SGX via brokers with a minimum trading size of about $310 or $3100 for Nikko AM Singapore STI ETF and SPDR STI ETF respectively. Alternatively, if investors are keen to invest a small amount of $100 on a regular basis ie monthly. They can opt for regular saving plans that are offered by brokers such Philip Securities or by banks such as OCBC and DBS Group.

The Monetary Authority of Singapore (MAS) in early 2012 introduced new rules requiring retail investors to complete Customer Assessment Reviews (CARs) with their financial intermediaries before investing in products classified as Specified Investment Products (SIPs). MAS later allowed certain products, notably ETFs that met certain criteria, to be exempt from the SIP classification and be reclassified as Excluded Investment Products (EIPs). Thus, like ordinary stocks, EIPs can be bought and sold by retail investors without needing to complete a CAR. Both the Nikko AM Singapore STI ETF and SPDR® STI ETF are now categorised as EIPs.

“To avoid missing on any SGX Investment Updates and Economic Calendars, you can do that here.”

Hutchison Port Hldgs Trust US  0.165 +0.004 +2.48%   
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
CapitaLand Mall Trust  2.600 -0.03 -1.14%   
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
Singtel  3.170 +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
StarHub  1.290 -- --   
Business: [FY18 Turnover] Mobile (34.9%), sale of equipment (22.4%), enterprise fixed (21.6%), pay TV (13.2%), broadband (7.9%).

Insight: May-19, 1Q19 total revenue rose 6% to $596.8m attr... Read More
SIA Engineering Co  2.600 +0.02 +0.78%   
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

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