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The Top 5 Dividend Paying Blue Chip Stocks

Blue chips, or stocks which make up the Straits Times Index (SGX: ^STI), tend to be well-known amongst investors in Singapore.

recent report provided some insights to the dividend yields of these 30 blue chip stocks.

The yield of the SPDR STI ETF (SGX: ES3), an exchange traded fund that mimics the fundamentals of the Straits Times Index (SGX: ^STI), can serve as useful context when looking at the yields of the blue chips. As of 2 September 2016, the SPDR STI ETF was offering a yield of 3.25%.

Here are the five highest-yielding blue chips (figures as of 26 August 2016, unless otherwise stated):

  1. Hutchison Port Holdings Trust  (SGX: NS8U) tops the list with a trailing distribution yield of 8.2%. But don’t rejoice just yet. The container port owner and operator had cut its distribution per unit in 2015 by 16%. For the first-half of 2016, the business trust further reduced its distribution by 10.8% year-on-year. Nonetheless, units of Hutchison Port Holdings Trust has provided a five-year total return of 12.4%.
  2. Ship builder Yangzijiang Shipbuilding Holdings Ltd  (SGX: BS6) is offering the second highest yield at 5.7%. Unfortunately, Yangzijiang Shipbuilding’s return has been lackluster – it has a five-year total return of merely 1.1%. The company’s dividend was also reduced from S$0.055 per share in 2014 to S$0.045 per share in 2015.
  3. CapitaLand Commercial Trust (SGX: C61U) takes third place with a distribution yield of 5.6%. The commercial real estate investment trust (REIT) has a market cap of S$4.6 billion and its units have generated a total return of 82% over the last five years. The REIT’s distributions have been rising over the past few years, climbing from S$0.0752 per unit in 2011 to S$0.0862 in 2015.
  4. Like CapitaLand Commercial Trust, oil and gas and property development conglomerate Keppel Corporation Limited (SGX: BN4) also has a dividend yield of 5.6%. But, the company’s shares have a negative five-year total return of over 18%. The firm also cut its interim dividend per share by 33% in its latest earnings report for the second-quarter of 2016. This follows a hefty 29% reduction in Keppel Corp’s dividend in 2015.
  5. Last but not least, StarHub Ltd (SGX: CC3) sports a 5.4% dividend yield. StarHub has generated a total return of around 70% over the past five years. The telecommunications company lowered its revenue-growth guidance for the whole of 2016 in its latest quarterly earnings. But, it also reiterated its intent to keep its dividend per share unchanged for the year; StarHub has been paying an annual dividend of S$0.20 per share since 2010.

The highest dividend yield is not always the best dividend yield. As investors, we should be looking for companies that can sustain – or even better, grow – their dividends in the future.

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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 doesn’t own shares in any companies mentioned.