Impact Of Dividends On Long Term STI Gains

The Straits Times Index (SGX: ^STI) returns over the past 12 months have been in line with its longer term annualised gains. The STI generated an 88.1% price gain in the ten years ending October 2013. This makes a 6.5% average annualised price gain. Including a 3.0% dividend yield, the total return comes to 9.5%. The SPDR STI ETF was established more than 10 years ago and has returned 9.6% over the same period – the ETF distributes dividends twice a year. Meanwhile in Singapore, the mean inflation rate over the past ten year has been near 2.5% according to Trading Economics, while property prices have gained 6.7%. 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% while the Nikkei 225 returned 2.4%.

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% over the period, yet two other stocks with equal index weighting of that stock gained 5% over the period – the index would remain unchanged.

Of the current 30 STI stocks, 80% 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% for Singapore Airlines on an annual basis to +27.2% 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 boost 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% while the average total return was 15.0%.  STI stocks that generated a total return more than 20% on an average annual basis over the past 10 years were Golden Agri (SGX: E5H), Sembcorp Marine (SGX: S51), Jardine Cycle & Carriage (SGX:C07), Jardine Strategic Holdings (SGX: J37), Singapore Exchange, Genting Singapore, Jardine Matheson Holdings and Keppel Corp. Note Jardine Strategic Holdings and Jardine Matheson Holdings are denominated in US Dollars, however their returns in the table below are based in SGD. 

Short Name Ten yr Px Chg (%) Ten yr

Total Return [with divs]


ICB Sector Name Dvd Ind Yld
GOLDEN AGRI-RESO 25.7 27.2 Food Producers 2.02
SEMBCORP MARINE 20.2 25.2 Oil Equipment, Services & Distribution 2.45
JARDINE CYCLE & CARRIAGE 21.1 24.9 General Retailers 4.19
JARDINE STRAT 20.9 22.5 General Industrials 0.73
SINGAPORE EXCH 16.1 22.2 Financial Services 3.80
GENTING SINGAPORE 21.3 21.5 Travel & Leisure 0.66
JARDINE MATHESON 18.0 21.2 General Industrials 2.53
KEPPEL CORP LTD 15.7 20.6 Oil Equipment, Services & Distribution 3.39
SEMBCORP INDUS 14.2 19.7 Oil Equipment, Services & Distribution 2.82
WILMAR INTERNATI 17.3 18.3 Food Producers 1.59
SIA ENGINEERING 9.4 16.2 Industrial Transportation 4.35
NOBLE GROUP LTD 12.7 15.2 General Industrials 2.27
COMFORTDELGRO CO 9.4 14.7 Travel & Leisure 3.41
HONGKONG LAND 11.2 14.5 Real Estate Investment & Services 2.72
SINGAPORE TELECO 6.8 13.5 Mobile Telecommunications 4.47
SINGAP TECH ENG 8.1 13.5 Aerospace & Defense 1.67
SINGAP PRESS HLG 0.8 13.3 Media 3.52
CAPITALAND LTD 10.1 12.8 Real Estate Investment & Services 2.25
CAPITAMALL TRUST 6.8 12.4 Real Estate Investment Trusts 5.09
OCBC BANK 7.5 12.0 Banks 3.28
UNITED OVERSEAS 4.5 8.6 Banks 2.88
CITY DEVELOPS 5.4 7.8 Real Estate Investment & Services 0.78
DBS GROUP HLDGS 3.1 7.0 Banks 3.36
SINGAPORE AIRLIN -0.9 3.8 Travel & Leisure 2.23
THAI BEVERAGE N.A N.A Beverages 2.85
OLAM INTERNATION N.A N.A Food Producers 2.68
HUTCHISON PORT-U N.A N.A Industrial Transportation 6.60
GLOBAL LOGISTIC N.A N.A Real Estate Investment & Services 1.30
CAPITAMALLS ASIA N.A N.A Real Estate Investment & Services 1.72
STARHUB LTD N.A N.A Mobile Telecommunications 4.50

Source: Bloomberg (data as of 3 November 2013).

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