Looking to find the highest dividend yielding stock on the SGX?
The SGX portal allows users to filter and sort all counters based on dividend yield, amongst other criteria. This can be accessed by clicking on the Company Information button from the Main Page.
The dividend filter is exceptionally useful for dividend players who can now see the highest dividend yield stock at a glance, at a simple click of the filter.
With returns like this, what are we waiting for. Intuitively one would go for the counter with the highest yield. But not all high dividend yield counters you see are Gems. Some are stones beneath the surface. How would you distinguish the gems from the stones?
This writer focuses on the sustainability of the dividends which gives the counter the dividend yield we see. Underpinning the sustainability are quantitative factors such as earnings trend, gearing and payout ratio, as well as qualitative factors such as nature of business, potential disruptive factors, and the company's position within its market.
Quantitative factors
a. Earnings trend: Since dividends are paid out of earnings, a downward earnings trend can mean lower dividends in the future.
b. Gearing: High gearing means higher interest costs and lower earnings (hence lower dividends) in a rising interest environment
c. Payout ratio: If dividends paid > earnings, this is unlikely to be sustainable. Much less so, if the company is paying dividends out of a loss.
Qualitative factors
d. Nature of business: Cyclical industries (e.g. commodities and shipping) face earnings upswings and downswings.
e. Potential disruptive factors: Innovation and technology in recent years have disrupted traditional industries,. Consider impact of the following: i.) Uber/Grab on taxi providers like ComfortDeelgro, ii.) Online news on SPH, iii.) E-commerce on traditional retail outlets
f. Company's position within market: High barriers of entry with few competitors is likely to protect earnings e.g telecoms
What are some of the factors you look at when deciding on what to invest? Leave a comment below.
The SGX portal allows users to filter and sort all counters based on dividend yield, amongst other criteria. This can be accessed by clicking on the Company Information button from the Main Page.
 |
| Click on "Company Information" to access the Filter |
The dividend filter is exceptionally useful for dividend players who can now see the highest dividend yield stock at a glance, at a simple click of the filter.
With returns like this, what are we waiting for. Intuitively one would go for the counter with the highest yield. But not all high dividend yield counters you see are Gems. Some are stones beneath the surface. How would you distinguish the gems from the stones?
This writer focuses on the sustainability of the dividends which gives the counter the dividend yield we see. Underpinning the sustainability are quantitative factors such as earnings trend, gearing and payout ratio, as well as qualitative factors such as nature of business, potential disruptive factors, and the company's position within its market.
Quantitative factors
a. Earnings trend: Since dividends are paid out of earnings, a downward earnings trend can mean lower dividends in the future.
b. Gearing: High gearing means higher interest costs and lower earnings (hence lower dividends) in a rising interest environment
c. Payout ratio: If dividends paid > earnings, this is unlikely to be sustainable. Much less so, if the company is paying dividends out of a loss.
Qualitative factors
d. Nature of business: Cyclical industries (e.g. commodities and shipping) face earnings upswings and downswings.
e. Potential disruptive factors: Innovation and technology in recent years have disrupted traditional industries,. Consider impact of the following: i.) Uber/Grab on taxi providers like ComfortDeelgro, ii.) Online news on SPH, iii.) E-commerce on traditional retail outlets
f. Company's position within market: High barriers of entry with few competitors is likely to protect earnings e.g telecoms
What are some of the factors you look at when deciding on what to invest? Leave a comment below.
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