There are some investors who prefer large companies for its stability. There are also some investors who prefer small companies which might provide growth. And then, there others investors who might like a bit of both. The FTSE Mid Cap Index might offer insights into the world of mid-sized companies: not too small that it can be crushed by bigger competitors and not too big where growth might be limited. Some of these mid-cap companies offer an above-average dividend yield too. A recent report provides…
There are some investors who prefer large companies for its stability. There are also some investors who prefer small companies which might provide growth.
And then, there others investors who might like a bit of both.
The FTSE Mid Cap Index might offer insights into the world of mid-sized companies: not too small that it can be crushed by bigger competitors and not too big where growth might be limited. Some of these mid-cap companies offer an above-average dividend yield too.
A recent report provides some insight into the components of the index. From there, I picked out the top five highest dividend yielding companies (data as of 30 September 2016):
- To provide context, the SPDR STI ETF (SGX: ES3) has a dividend yield of 3.2% as of 30 September 2016. The index tracking exchange traded fund (ETF) serves as a proxy to the Straits Times Index (SGX: ^STI). In this sense, a dividend yield above 3.2% could be considered to be above average.
- The highest yielding stock comes from the real estate investment trust (REIT) arena. Mapletree Industrial Trust (SGX: ME8U) offers a dividend yield of 6.4%. The industrial-based REIT has a market capitalisation of S$3.2 billion. Mapletree Industrial REIT has increased its distributions per unit (DPU) from around S$0.065 in the financial year ending 31 March 2012 (FY2011/12) to S$0.081 in FY2015/16.
- Ship builder Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6) offers the second highest yield at 6.0%. Unfortunately, total returns for Yangzijiang Shipbuilding has been lackluster – it’s five-year total return was just 6.9%. The company’s dividend was also reduced from S$0.055 per share in 2014 to S$0.045 in 2015. Yangzijiang Shipbuilding has a market capitalisation of S$2.9 billion.
- It shouldn’t be too surprising to see another REIT in the third spot. Keppel REIT (SGX: K17U) sports a DPU of 5.8%. Keppel REIT’s track record for distributions is a little spotty, though. DPU has declined from around S$0.079 in 2013 to S$0.068 in 2015. Keppel REIT has a market cap of S$3.7 billion.
- Yet another REIT, Suntec Real Estate Investment Trust (SGX: T82U) also weighed it with a 5.8% distribution yield. Suntec REIT has a market capitalisation of S$4.3 billion. Suntec REIT’s DPU has barely budged over the past few years; DPU in 2011 was $0.099 while DPU in 2015 was $0.100.
- A STI component, CapitaLand Commercial Trust (SGX: C61U) rounds off the top five with a distribution yield of 5.5%. 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. CapitaLand Commercial Trust has a market cap of S$4.7 billion and generated a total return of almost 109% over the last five years.
To be sure, the highest dividend yielding mid-cap companies might not always be the best companies to buy. Airline caterer SATS Ltd (SGX: S58), for instance, has a below average dividend yield of 3.0%, but it has generated total returns approaching 200% over the last five years.
As investors, we might want to do our due diligence for all companies of all sizes.
For more investing insights and to keep up to date on the latest financial and stock market news, you can sign up for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore.
Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.
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 shares in Suntec REIT.