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Five STI Reserve Stocks Average 4.3% Dividend Yield

My Gateway (92 x 92) Like the Dow Jones Index, there are 30 blue chip constituents of the STI.  Another five constituents make up the STI Reserve List.  In September, Yangzijiang Shipping replaced Suntec REIT in the Straits Times Index (SGX: ^STI) reserve list. The STI reserve list is now made up of Ascendas Real Estate Investment Trust (SGX: A17U)Keppel Land (SGX: K17), UOL Group (SGX:U14), CapitaCommercial Trust (SGX:C61U), and Yangzijiang Shipbuilding Holdings (SGX:BS6, SGX:S07).

The Dividend Yields

These five stocks average a comparatively higher dividend yield than the dividend yield of the STI – taking into account constituent weightings the STI dividend yield stands at 3.3%. Ranked by highest to lowest, the indicative dividend yield of the five reserve counters are 6.3% for Ascendas Real Estate Investment Trust (REIT), 5.6% for CapitaCommercial Trust, 4.3% for Yangzijiang Shipbuilding Holdings, 3.3% for Keppel Land and 2.3% for UOL Group. Together, these five counters average a 4.3% dividend yield.

Name Ticker Code Market Cap ($B) Px Chg YTD (%) Dvd Ind Yld (%) Total Return YTD (%) 12M Total Return (%) 5Y Annualised Total Return (%)
Ascendas REIT A17U 5.52 -2.95 6.26 1.15 -3.99 16.98
CapitaComm REIT C61U 4.08 -15.72 5.61 -11.24 -2.56 20.36
Yangzijiang Shipbuilding BS6/SO7 4.46 21.35 4.27 28.1 30.82 37.75
Keppel Land K17 5.67 -8.93 3.25 -6.2 9.22 28.46
UOL Group U14 4.95 7.54 2.34 9.85 13.86 29.98

Source: Bloomberg (Data as of 17 October)

Ascendas REIT – how to calculate the indicative dividend yield

Ascendas REIT maintains the highest indicative yield of the Reserve List and the second highest indicative dividend yield when including the 30 STI constituents. The indicative dividend yield is calculated by taking the July distribution of S$0.0355, multiplying by four (to take account of the quarterly distribution), and divided by the most recent price (S$2.30 as of the Thursday close). This comes to 6.26%. Note the dividend distribution declared on Wednesday of S$0.036 which will be ex-dividend on Tuesday 22 October is not used for the indicative dividend yield, as indicative dividend yields generally take the most recent ex-dividend amount into consideration.  On another note, as Today Online headlined, Ascendas REIT Q2 distributable income was up 9.3% – this was calculated by comparing the distributable income S$86.4 million for the Sep Quarter with the distributable income for the Sep Quarter last year at S$79.0 million.  Ascendas REIT reports all its revenue in Singapore, through science and business parks, hi-tech industrial parks, logistics and distribution centres and light industrial properties.

CapitaCommercial Trust – history of consistent dividend distribution

The other REIT of the Reserve List, CapitaCommercial Trust, invests in commercial real estate properties in Singapore. CapitaCommercial Trust is an indirect wholly-owned subsidiary of CapitaLand – according to Bloomberg, as of Thursday, Capitaland held 31.5% of the units of CapitaCommercial Trust. Over the past three years, the semi-annual dividend distribution of CapitaCommercial Trust has varied from a low of S$0.0375 in January 2012 to a high of S$0.0408 in January 2013 which has provided an annualised return of 4.8% over the three years.

 Yangzijiang Shipbuilding – dividends boost YTD gain to 28.1%

Yangzijiang Shipbuilding is China’s second-biggest private shipyard by market capitalisation with its main yards located in New Yangzi and Xinfu. The company produces a range of commercial vessels, including mini bulk carriers, bulk carriers, multi-purpose cargo vessels, containerships, chemical tankers, offshore supply vessels, rescue and salvage vessels and lifting vessels. Investors are able to buy or sell shares of Yangzijiang Shipbuilding (Holdings) in Singapore Dollars (SGD) or Renminbi (RMB). As of Thursday, Yangzijiang Shipbuilding had led the year-to-date gains of the five reserve counters with a 21.4% price gain, and dividends further boosting the year-to-date to 28.1%.

Keppel Land & UOL Group – regional real estate developers with relative high dividend yields

Keppel Land and UOL Group are both real estate developers with similar market capitalisation size and different heights of international revenue. According to Bloomberg, Keppel Land reported just under a third of its revenue in Singapore in its last Annual Report, while UOL Group reported three-quarters of its revenue in Singapore. Dividend yields of the two real estate counters show that both outperformed the FTSE ST Real Estate Holding & Development Index at 2.3% for UOL Group and 3.3% for Keppel Land. The FTSE ST Real Estate Holding & Development Index recorded a 2.1% dividend yield. However, as of Thursday, UOL had generated a total return of 9.9% in the year-to-date, versus Keppel Land declining 6.2%. Applying a longer term five year, the average annualised return (including dividends) of the two companies were also similar in that UOL Group came to 30.0% and  Keppel Land came to 28.5%.

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