The Top 5 Market-Beating Blue Chip Stocks With An Above-Average Dividend Yield

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

A recent report provides some insights to the performance and dividend yield offered by these 30 blue chip stocks, as of 26 August 2016. It turns out that all 30 companies pay a dividend.

But finding the highest dividend alone might not be sufficient. In my previous article , I pointed out that the companies with a high dividend yield might not have provided satisfying returns over the last five years. Some returns might even be negative.

So, we might want to look for market-beating performance as well. From here, I decided to set two criteria to see which companies filtered through:     

  1. Total returns of at least 39% over the last five years. This is based on a compounded return of 6.75% per year, which is the long-term annualised return of the SPDR STI ETF (SGX: ES3). The SPDR STI ETF is an exchange traded fund that mimics the fundamentals of the Straits Times Index (SGX: ^STI).
  2. Dividend yield above 3.7%. This represents the average dividend yield of the 30 companies on the STI, as of 26 August 2016.

Here’re the top five, ranked by total returns (figures as of 26 August 2016, unless otherwise stated):

  1. CapitaLand Commercial Trust (SGX: C61U) is comes up tops, with a total return of almost 82%. The commercial real estate investment trust (REIT) also offer an above-average yield of 5.6%. CapitaLand Commercial Trust had a market cap of S$4.6 billion.
  2. A pair of telcos took the second and third spots. Singapore Telecommunication Limited (SGX: Z74) nudged past StarHub Ltd (SGX: CC3) with a total return of around 71% over the timeframe. StarHub generated a total return of around 70% over the past five years. The former offers a dividend of 4.1% while the latter has a 5.4% yield.  
  3. Ascendas Real Estate Investment Trust (SGX: A17U) weighed in at fourth place. The industrial REIT offers a dividend yield of 4.6%. Ascendas REIT also clocked total returns of over 62% over the previous five year stretch.
  4. Another REIT stalwart, CapitaLand Mall Trust (SGX: C38U) clinches the fifth spot. The owner of popular malls around Singapore has a dividend yield of 5.1%. The REIT also generated total returns of 54% over the last five years.      

The two criteria is not meant to be an exhaustive test of quality. Instead, it simply looks for above-average dividend payers that have beaten the market over the last five years. Outperformance in the past is not an indication of what is going to happen in the future.

As always, we should do our due diligence before committing our hard earned cash into any stock.

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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.