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Singapore’s Highest Yielding Blue Chips

Singapore’s stock market barometer the Straits Times Index (SGX: ^STI) closed yesterday at 3,135 points. Based on data for the STI-tracker, the SPDR Straits Times Index ETF (SGX: ES3), the index has a trailing dividend yield of around 2.7% at that level.

But while the “average” yield among the blue chips does not exactly send pulses racing, there are more than a handful of shares within the STI – excluding business trusts and real estate investment trusts – that have some attractive yields above 4%.

At the moment, the four highest-yielding shares within the index include Singapore Press Holdings (SGX: T39), Singapore Telecommunications (SGX: Z74), Starhub (SGX: CC3), and SIA Engineering (SGX: S59).

Company

Share Price

Dividend for last completed financial year

Dividend Yield

Singapore Press Holdings

S$4.03

S$0.40

9.9%

SingTel

S$3.55

S$0.168

4.7%

Starhub

S$4.25

S$0.20

4.7%

SIA Engineering

S$5.00

S$0.22

4.4%

Source: S&P Capital IQ

Singapore Press Holdings

Newspaper publisher and real estate outfit Singapore Press Holdings managed to clock up an exceptionally high dividend yield for its financial year ended 31 August 2013 due to a special dividend of S$0.18 per share that was related to the spin-off of its two properties.

Singapore Press Holdings had sold Paragon and Clementi Mall into a new real estate investment trust, SPH REIT (SGX: SK6U), last July for S$3.07b. Part of the purchase price – some S$1.41b – was settled in cash and the company had used part of that S$1.41b to issue special dividends of S$0.18 per share to its shareholders. SPH REIT is currently 72% owned by Singapore Press Holdings.

If we strip out the spin-off-related special dividend, SPH paid out S$0.22 per share from its ‘normal’ business operations. That translates into a historical dividend yield of 5.5%.

SingTel and Starhub

Telecommunication operators Singapore Telecommunications and Starhub, being consumer-facing companies, would hardly be strangers to investors.

SingTel’s not only the largest telecom provider in Singapore, its Australian subsidiary Optus, is also the second largest player in the telecom industry in Australia. In addition, SingTel has substantial ownership stakes in top-ranked telecom providers in countries like India, Thailand, Philippines, and Indonesia. In short, SingTel’s not just a Singapore story, it’s a global story.

Starhub, in contrast to SingTel, is a local story. It’s also the second-largest telecom provider in Singapore, and incidentally, is much more efficient than SingTel in utilising its assets to generate sales.

SIA Engineering

SIA Engineering is a subsidiary of full-service carrier Singapore Airlines (SGX: C6L) and earns its keep by maintaining, repairing, and overhauling aircrafts for more than 85 airlines around the world.

While the company has not had consecutive years of dividend growth, it has still displayed some significant increase in its dividend pay-out over the years. SIA Engineering’s dividend has grown by almost five-fold from S$0.045 per share for the financial year (FY) ended March 2002, to S$0.22 per share for the 12 months ended March 2013.

SIA Engineering also has a history of achieving high returns on equity over the years, which goes some way in explaining its market-beating 141% increase in share price in the five years since the start of 2009.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing doesn’t own shares in any companies mentioned.