Forbes Asia’s inaugural “Best Over A Billion” list highlights the 200 top-performing listed companies across Asia with sales of US$1 billion or more. In the 2019 edition, just released at the end of August, eight Singapore-listed companies were featured. They were chosen based on many factors, including their average five-year revenues, operating income growth, return on capital, and projected growth over the next one to two years.
A recent report by the Singapore Exchange highlighted the dividend yields of those billion-dollar companies. Here’s a look at the top five stocks (yields as of 30 August 2019).
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Slurping up the tasty yields
The three big Singapore banks made the top of the list.
The best-yielding stock is none other than Singapore’s largest bank, DBS Group Holdings Ltd (SGX: D05), with a dividend yield of 5%. Next is Oversea-Chinese Banking Corp Limited (SGX: O39), which had a yield of 4.5%. United Overseas Bank Ltd (SGX: U11) slots into the third spot with a yield of 4.2%, excluding any special dividend.
Of the three banks, DBS is the only bank that pays dividends every quarter, instead of half-yearly. It started paying quarterly dividends in its 2019 first quarter. Then, it said that such quarterly dividends provide investors with more regular income streams. The S$1.20 per-share yearly dividend is now broken up into four equal parts of S$0.30 each. DBS is also the best-performing bank with a three-year total return of 86.5%.
Taking fourth place is Olam International Ltd (SGX: O32). The food and agri-business company had a dividend yield of 4% and a three-year total return of negative 1.5%. Olam’s dividend has been growing in the past few years, climbing from S$0.06 per share in 2016 to S$0.075 per share in 2018.
Investors may remember that the commodities trader was attacked by US-based short-seller Muddy Waters in 2012. Olam seems to have emerged stronger from the attack and generated positive free cash flow in 2017 and 2018, as opposed to negative free cash flow in the previous years. That could have contributed to its increasing dividends.
Last but not least is property giant CapitaLand Limited (SGX: C31) with a dividend yield of 3.6%. Over the last three years, the company gave investors a not-so-shabby total return of 24%.
CapitaLand recently acquired Ascendas-Singbridge for S$11 billion to create a combined entity with over S$123 billion of assets under management. The larger asset base should provide additional recurring income for the group, which in turn could translate into higher dividends.
The Foolish takeaway
Being chosen to be featured in the Forbes Asia list is no small feat, but it doesn’t make a company a sure-win investment, either. Investors should still do their due diligence on these companies before investing their hard-earned money.
Also, income investors should analyse whether the companies’ dividends are sustainable. A high dividend yield doesn’t mean a company can afford to pay out the same amount in dividends in the years to come.
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, DBS Group Holdings Ltd, Oversea-Chinese Banking Corp Limited, United Overseas Bank Ltd, and CapitaLand Limited. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange and Oversea-Chinese Banking Corp Limited.