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UOB Kay Hian: An Ultimate Guide To Picking Dividend Stocks
Aspire, Investments | 25 February 2015
Related stocks:
V03
J85
By: Lim Si Jie
Articles (169) Profile

Singapore has a very interesting financial market that provides investors with defensive dividend stocks. Dividend stocks are defensive by nature because it allows investors to ride safely through volatile times. UOB Kay Hian has a perculiar strategy involving four screening criteria for dividend plays that sifts out potential dividend stocks that provides a stream of steady income for long term investors.

Four Important Screening Criteria

1. Historical yield and dividend payout ratio: UOB Kay Hian looks at companies with a strong track record of dividend payouts.

2. Forward earnings or latest results: UOB Kay Hian will then use its forward estimates to determine whether the company is able to continue performing well in the future.

3. Cash flow statement: The cash flow statement is used to analyze the health of the company’s cash flow and evaluate its potential revenue.

4. Potential catalyst: Lastly, UOB Kay Hian sifts out companies that meet the important criteria and have potential catalysts to pay out bonus dividends. Here are three companies that have been highlighted by UOB Kay Hian. These companies have fulfilled all the above criteria.

Hutchinson Port Holdings Trust: TP US$0.80

The US economy is gaining strength as its GDP increased by 4.6 percent year-on-year in 2Q 2014. Manufacturing activities and consumer sentiments are also promising and the US economic outlook is expected to remain positive.

Full-year throughput growth for HPH Trust is expected to be mid-single digit, supported by strong US cargoes and the arrival of more very large containerships (VLCS) from 2014 onwards.

UOB Kay Hian believes that “if HPHT can achieve its DPU target in 2014,” its 2015 dividend yield of 7.9 percent will look “attractive among Singapore-listed big-cap trust/REITs.”

Source: HPH Trust, UOB Kay Hian

Venture Corp: TP $8.29

Most of Venture’s customers are generally positive albeit having some concerns such as wage pressures and customer consolidation. Wage pressures might persist while customer consolidation is expected to continue although it may be less frequent.

Venture has commenced the production of desktop genome sequencers and continues to be optimistic about the growth in the LDA business in 2015 after the completion of a reorganisation.

Source: Venture, UOB Kay Hian

CDL Hospitality Trust: TP $2.01

UOB Kay Hian expects “RevPAR (Revenue per available room) to consolidate and see a slight pickup in 2015” and its demand might be driven by the recently-opened Singapore Sports Hub. The sector will also set to benefit from the visa relaxation for ASEAN countries (Thailand, Malaysia, Philippines and Indonesia). The Singapore government is targeting 20 million visitors by 2020, which translates into a 10 percent CAGR over the next seven years.

Occupancy rates of the recently bought hotel properties in Tokyo remained at 90 percent with RevPAR increasing 10-13 percent over the last two years.

CDL HTrust’s gearing of 30 percent is the lowest among Hospitality REIT peers. However, UOB Kay Hian notes that “the acquisition environment in Asia remains tight with cap rate compression across the board.”

Source: CDL HTrust, UOB Kay Hian

Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.

Hutchison Port Hldgs Trust US  0.182 -- --   
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
Venture Corp  15.370 +0.17 +1.12%   
Business: Co provides technology services, products and solutions. [FY18 Turnover] Advance Manufacturing & Design Solutions (AMDS) [74.6%], technology products & design solutions (TPS) [25.4%].

Insight: Apr-19, 1Q19 revenue rose 8.5% to $928.8m due to b... Read More
CDL Hospitality Trusts  1.600 +0.010 +0.63%   
Business: A stapled group comprising CDL Hospitality REIT and CDL Hospitality Business Trust.

Insight: Apr-19, 1Q19 gross revenue and NPI dropped 10.6% a... Read More


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