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Here Are 3 Billion-Dollar Stocks With Dividend Yields Of Over 5%

There are many ways for investors to get investment ideas. One popular way is to run a screen on the market with valuation-based criteria such as price-to-earnings (PE) and price-to-book (PB) ratios.

For investors who are more focused on getting income from their stocks, one of the screening criteria they may favour would be the dividend yield. This metric gives us a picture of how much bang for our buck we’re getting in dividends when we invest in a stock. The higher the yield number is, the more dividends investors can get.

I thought it’d be interesting to see what big stocks in Singapore (by big, I mean companies which have a market capitalisation of S$1 billion or more) have a dividend yield of over 5%.

For perspective, the SDPR STI ETF (SGX: ES3) has a yield of 3.2% right now. The SPDR STI ETF is an exchange-traded fund that tracks Singapore’s market barometer, the Straits Times Index (SGX: ^STI).

There are many billion-dollar companies that have yields of 5% or more. Here are three I’ve picked at random:

Their yields and market caps are displayed in the table below:

Venture, StarHub, and M1 dividend yield and market cap table
Source: S&P Global Market Intelligence

Let’s have a few words about their business numbers, starting with Venture. The electronics manufacturing services provider has kept its dividend steady at S$0.50 per share since 2012. But, its free cash flow per share has fluctuated widely in those years, falling from S$0.36 in 2012 to S$0.26 in 2013, before rising to S$0.40 in 2014 and S$0.80 in 2015.

The other two companies are likely to be well-known amongst consumers here given their business of providing telecommunications services.

StarHub is the larger of the two and the company has kept its dividend fixed at S$0.20 per share since 2010. The company’s free cash flow though, has declined over the years. It started at S$0.232 per share in 2010, but ended 2015 at only S$0.125.

As for M1, it sources its revenue predominantly from Singapore, just like StarHub. But, M1’s dividend per share has been less steady, having fallen in two straight years from S$0.21 in 2013 to S$0.189 in 2014, and then to S$0.153 in 2015. In those years, the company’s free cash flow has also dropped, from S$0.192 per share in 2013 to S$0.143 in 2014 and then S$0.113 in 2015.

While a high dividend yield can be a useful starting point for further research, it should be noted that there are many other important factors that investors must look at before any investing decision can be reached. Some include a stock’s gearing level and ability to generate cash (we’ve taken a brief glance at the latter).

It’s worth noting that stocks with high yields can become lousy investments too. So, it can be dangerous to invest in a stock based on its yield alone.

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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.