A Close Look At DBS Group Holdings Ltd’s Dividend, Growth, And Valuation

DBS Group Holdings Ltd (SGX: D05) is a company that likely needs no introduction for investors in Singapore.

The company is the largest bank in Singapore by total assets (some S$439 billion at the moment) and has many branches dotted around our Garden City.

But while investors may know the name DBS, they may not be that familiar with the bank’s business fundamentals. Here’s a look at a few important aspects of the bank’s business, namely, its dividend, growth, as well as valuation.


At DBS’s current share price of S$16.20, it has a yield of 3.7% thanks to its 2015 dividend of S$0.60 per share. For some perspective on DBS’s yield, the SPDR STI ETF (SGX: ES3) has a yield of 3.4% right now; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of the Straits Times Index (SGX: ^STI).

Let’s turn to DBS’s assets-to-shareholders’ equity ratio and pay-out ratio now. The former measures how levered a bank is while the latter measures a company’s dividend as a percentage of its earnings.

Both ratios can give us clues on the sustainability of a bank’s dividend. Generally speaking, the lower ratios, the better it could be. But, it must be noted that they are not the only ratios to look at when studying a company’s dividend.

DBS currently has an assets-to-shareholders’ equity ratio of 10.5, a decline from the 11.7 seen a year ago. With earnings per share of S$1.77 in 2015, DBS thus has a pay-out ratio of 34%.


Here’s a table showing how DBS’s total income (essentially its revenue) and book value per share has grown from 2011 to 2015:

DBS total income and book value per share
Source: DBS’s annual report

We can see that the bank has demonstrated consistent growth in both its total income and book value per share for the timeframe under study. The latter metric is also commonly taken to be a proxy for the economic value of financial institutions.

From 2011 to 2015, DBS has grown its total income and book value per share by a total of 41% and 32%, respectively.


Given the importance of the book value per share to a financial institution as I’ve mentioned earlier, the price-to-book (PB) ratio is thus a valuation metric that investors often look at with banks. The ratio divides a bank’s share price with its book value per share.

DBS has a PB ratio of 0.99 right now.

DBS price-to-book (PB) ratio since 18 July 2011
Source: S&P Global Market Intelligence

As the chart above shows, the bank’s valuation is currently near a five-year low.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.