Equities offering sustainable dividend payments with long term capital appreciation potential will be emphasised, which are broadly categorised as Dividend Anchors and Dividend Growers.
The Dividend Advantage
Dividend expectations for Singapore corporates continue to remain more resilient than earnings estimates, which is a testament to the quality of underlying earnings, cash flows and balance sheets. Since 2010, reinvested dividends had offered additional alpha and enhanced the returns for the STI by more than 50% as shown below on a cumulative basis (annualised returns of the STI since 2010 to March 2022 is more than 4% p.a.).
In a low interest–rate environment, where decent yields are hard to come by, stocks that pay an attractive and predictable dividend yield will continue to be in strong demand with yield–hungry investors.
Reinvested Dividends Enhanced STI Returns Since 2010
Source: Bloomberg, March 2022. Returns are shown on a cumulative basis. Annualised returns of the STI since 2010 to March 2022 is more than 4% p.a.
Any forecast or past performance is not necessarily indicative of future performance.