The Singapore stock market is the home to some large real estate companies.
A recent report highlighted the 20 largest real estate companies in Singapore. As it turns out, all of these companies pay a dividend as well.
The SPDR STI ETF (SGX: ES3), an exchange traded fund that mimics the Straits Times Index (SGX: ^STI), could provide a good benchmark for comparing the dividend yields of individual companies. The ETF offers a distribution yield of 3.5%, as of 10 June 2016.
Here’re some highlights from the report (figures as of 30 May 2016, unless otherwise stated):
- Singapore’s largest listed real estate company is Hongkong Land Holdings Limited (SGX: H78). The real estate firm weighs in with a market capitalisation of almost $20 billion and offers a dividend yield of 3.1%. The dividend yield might not sound impressive, but Hongkong Land actually has a history of increasing its dividends. The company is also priced at just 0.5 times its book value.
- In contrast, Wheelock Properties (Singapore) Ltd (SGX: M35) offers a higher dividend yield of 4.1%. But, the company has not increased its dividend in the past five years. Properties under its umbrella include Wheelock Place and Scotts Square.
- United Industrial Corporation Ltd (SGX: U06) has a dividend yield of 1.1% and a market cap of $3.9 billion. UIC, which owns Novena Square and Marina Square among other properties, is trading at a price-to-book (P/B) ratio of 0.65. For perspective, the median P/B ratio for the 20 largest real estate stocks is 0.7.
- UIC’s sibling, UOL Group Limited (SGX: U14), has a market capitalisation of $4.5 billion and a dividend yield of 2.6%. The real estate owner and developer is also a component of the Straits Times Index. It has a P/B ratio of 0.6.
The best income stocks may not be those with a high dividend yield. Each real estate firm comes with a different investing risk profile. As Foolish investors, we might want to put our thinking hats on to find the companies with dividends that are sustainable and if possible, have the ability to grow over the long term.
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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 contributor Chin Hui Leong owns units in Hongkong Land.