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The Top 5 Highest Dividend Yields From The Straits Times Index (And 1 Quick Investing Lesson)

The Straits Times Index (SGX: ^STI) is home to 30 Singapore-listed companies. These companies are also some of the largest stocks in our local market.

According to a recent report by bourse operator Singapore Exchange, the Straits Times Index’s companies offer a dividend yield of 3.6% on average. Obviously, some companies will have a higher yield than the average. Here are the five Straits Times Index stocks with the highest dividend yields (figures as of 12 May 2017):

1. Hutchison Port Holdings Trust (SGX: NS8U) tops the list with a trailing dividend yield of 9.7%. But some caution is warranted here. The container-port owner has reduced its distribution three times in the last four years. The business trust has also produced a negative total return of 9.7% over the last five years.

2. Next on the list is StarHub Ltd (SGX: CC3) with a yield of 5.9%. Earlier this year, the telco said that it will be lowering its dividend for 2017 by 20% from 2016’s level. StarHub’s stock has returned 10% to shareholders over the past five years.

3. Ascendas Real Estate Investment Trust (SGX: A17U), a REIT that focuses on industrial properties, is in second place with a 6.1% yield. It has increased its distribution per unit (DPU) in each of its last seven fiscal years. Ascendas REIT also provided a five-year total return of 70.7%.

4. Another REIT, CapitaLand Commercial Trust (SGX: C61U), weighs in with a yield of 5.8%. As its name might suggest, the REIT owns commercial properties. Historically, commercial rents have been volatile. However, CapitaLand Commercial Trust has managed to increase its DPU every year since 2011. The REIT also generated a total return of 64% in the past five years.

5. CapitaLand Mall Trust (SGX: C38U) comes in at fifth place with the same distribution yield of 5.8%. The shopping-mall owner increased its DPU each year between 2011 and 2015, but reduced its payout by a slight 1.1% in 2016. Over the last five years, CapitaLand Mall Trust has produced a total return of 42.1%.

There may be good reasons why certain stocks are offering a higher dividend yield. It could be that the company’s past dividend is not indicative of what it will pay out in the future. Meanwhile, REITs are obliged to pay out at least 90% of their taxable income for tax purposes; this results in REITs generally having higher yields than most stocks.

Therein lies a lesson.

As investors, we have to go beyond a stock’s dividend yield to understand whether its dividends can grow or be sustained 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. The Motley Fool Singapore has recommended shares of Singapore Exchange and CapitaLand Mall Trust. Motley Fool Singapore contributor Chin Hui Leong owns shares in CapitaLand Mall Trust.