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How Did Singapore’s Telco Stocks Fare in 2016?

2016 has come to an end and it is time to tally up the scores.

A pair of recent reports (here and here) by bourse operator Singapore Exchange Limited (SGX: S68) had provided information on Singapore’s three main telco stocks, namely Singapore Telecommunications Limited (SGX: Z74)StarHub Ltd (SGX: CC3), and M1 Ltd (SGX: B2F).

The reports included information on the telco stocks’ performance in 2016 and their dividend yields at the start of 2017. It might be worth comparing all three telcos in terms of their valuation, dividend yield, and performance:

  1. When it comes to stock performance, Singtel is the only telco that delivered a positive total return in 2016; Singtel’s shares provided a total return of 4%. As for StarHub and M1, the former lost almost 20% in value while the latter had a negative total return of more than 23%. For comparison, the Straits Times Index (SGX: ^STI) had registered a total return of 3.8% in 2016.
  2. The decline in its stock price leaves M1 with a 7.8% dividend yield (as of 3 January 2017), the highest of the lot. Not too far behind is StarHub, which sports a 7% dividend yield. Singtel, on the other hand, has a dividend yield of 4%.
  3. The price-to-earnings (PE) ratio could be a useful measure of value for Singapore’s telcos. According to data from SGX StockFacts as of 11 January 2017, M1 has the lowest PE ratio at 11.8. StarHub is in second place with a PE ratio of 13.7 while Singtel has the highest valuation at 15.8.

The above is a brief comparison of Singapore’s major telcos over three dimensions: Their valuation, dividend yield, and performance. They could be useful starting points for further research for any investor who’s interested in telco stocks in Singapore.

Investors should also note that a high dividend yield and low valuation does not automatically make a stock a buy. As always, Foolish investors should dig deeper to understand the risks and possible upsides in any company they’re interested in.

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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.