Publication Date : 13-03-2015
Listed companies in Singapore are among the most generous in the region when it comes to distributing dividends, according to a Singapore Exchange My Gateway report out yesterday.
Companies making up the FTSE Singapore Index returned a dividend yield of 3.32 per cent last month, the highest among the 11 Asian economies surveyed.
This return was also well above the 2.35 per cent average yield of the FTSE indexes for Asia.
The little-known FTSE Singapore Index is broader than the 30-constituent blue-chip Straits Times Index (STI). It has 42 constituent large and mid-cap stocks.
Its performance is expressed in total returns in United States dollars, making for easier comparisons across stock markets.
Southeast Asian markets topped the table, with Singapore followed by Malaysia at 3.28 per cent and Thailand at 2.99 per cent.
Next were mainland China at 2.96 per cent, Taiwan at 2.6 per cent, Hong Kong at 2.52 per cent, Indonesia at 2.17 per cent, the Philippines at 1.63 per cent, Japan at 1.61 per cent, South Korea at 1.4 per cent and India at 1.38 per cent.
One possible reason for Singapore outperforming the rest of the region is the sizeable number of real estate investment trusts (Reits) and business trusts listed here, said Voyage Research deputy research head Liu Jinshu.
Such counters offer higher dividends given the nature of their business. Reits, for instance, must distribute 90 per cent of their taxable income to qualify for tax breaks.
Another reason for the strong showing by Singapore companies could be the culture and the higher level of development compared with its Southeast Asian neighbours, noted Liu.
“Blue-chip companies in more developed markets like Singapore tend to have better cash flow where they can give higher dividends, while growing firms in developing economies need more money to invest in capital assets.
“To some extent it also depends on the culture, like companies in Japan, where they could lean more towards investing for export markets or mergers and acquisitions rather than to repay shareholders.”
The SGX report also highlighted 47 stocks listed here, each with a market capitalisation of more than S$ 1 billion (US$ 723.5 million) and offering dividend yields equal to or above that of the FTSE Singapore Index.
Asian Pay Television Trust was the top performer with a dividend yield of 8.9 per cent. Hutchison Port Holdings Trust was second with a 7.6 per cent dividend yield, followed by OUE Hospitality Trust with a 7.3 per cent dividend yield.
The dividend payout situation could improve further, said Fundsupermart general manager Wong Sui Jau.
“We feel the Singapore market has reached the bottom of the downward revision cycle for earnings. So in the next one or two quarters, earnings forecasts could be revised upwards, which is positive for dividend payouts.”
The SGX report added that the 47 stocks averaged a 2.3 per cent total return for the year so far, bringing the average one-year total return to 14 per cent.
Total returns include dividends and capital gains.
China Merchants Holdings came out tops in terms of total returns, with 9.7 per cent generated for the year so far.
AusNet Services and Mapletree Greater China Commercial Trust were next with 9 per cent total returns each.
Most of the STI stocks are in the FTSE Singapore Index, along with the largest stocks of the FTSE Mid Cap Index.
The FTSE Singapore Index does not include secondary listings and notable STI components that are excluded from it are Jardine Matheson, Jardine Strategic and Hong Kong Land.
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