Top 5 Dividend Stocks or REITs I may buy in 2024 – for dividend yield / capital gains (as a Singapore Investor)

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We’ve been doing rather a fewer macro focussed pieces nan past fewer weeks.

So I figured for this week – let’s spell backmost to azygous banal level discussion.

The caller emergence successful liking rates has provided a bully sell-off successful dividend stocks (especially REITs) that has opened up absorbing opportunities for agelong word investors.

Based connected today’s prices.

What are nan Top 5 Dividend Stocks aliases REITs I whitethorn bargain successful 2024 – for dividend output and superior gains?

    

Top 5 Dividend Stocks aliases REITs I whitethorn bargain successful 2024 – for dividend output / superior gains (as a Singapore Investor)

OCBC Bank

Price: $13.75

Market Capitalisation: $62 billion

Dividend Yield: 6.0%

Price to Book Ratio: 1.17x

What I for illustration astir this Dividend Stock?

Singapore slope stocks person been outperforming of precocious – there’s nary denying that.

Because liking rates stay high, and nan system remains resilient, Singapore banks person been performing very well.

So nary database of dividend stocks will beryllium complete without immoderate mention of nan Singapore banks.

No uncertainty DBS is nan champion executing slope of nan 3 Singapore banks.

But pinch DBS priced astatine 1.7x book value, and a 6.0% dividend output coming – nan mobility is really overmuch of that is already priced successful by nan market.

Meanwhile, UOB Bank seems to beryllium nan worst of nan 3 section banks, consistently reporting nan lowers ROE, and besides reporting a driblet successful nett liking income nan latest quarter.

OCBC is location successful nan mediate of nan pack, and fixed it waste and acquisition astatine a (somewhat) reasonable 1.17x book worth and 6.0% dividend yield, I decided to see OCBC slope for this list.

What are nan risks pinch this Dividend Stock?

As you tin spot above, UOB slope reported a 2% 4th connected 4th driblet successful nett liking income.

Which raises nan mobility of whether this is unsocial to UOB, aliases whether it is simply a portend for little profits to travel for nan banks generally.

Here’s US liking rates nan past 30 years.

You tin spot that each clip liking rates went up, they usually travel down after.

And prevention for nan 1995 period, each clip liking rates came down – it usually meant a recession.

For nan record, I wholly get nan statement that this clip whitethorn beryllium different because of higher structural ostentation and a resilient system – which intends that liking rates tin enactment precocious while economical maturation conscionable muddles on – which could beryllium a godsend for slope profits.

But I deliberation it would beryllium foolish to norm retired nan anticipation of a correction by nan Feds that ends successful a recession / surging inflation.

Long communicative short – yes banks are doing well, and for now they are awesome dividend stocks.

But don’t beryllium unsighted to nan macro risks, and size nan position well.

Haw Par

Price: $9.68

Market Capitalisation: $2.1 billion

Dividend Yield: 4.1%

Price to Book Ratio: 0.62x

What I for illustration astir this Dividend Stock?

Yes I get that galore dividend investors committedness by Haw Par.

And I tin spot why excessively – this is nan classical Warren Buffett benignant of banal that is trading good beneath “fair value”.

Haw Par’s business is broadly divided into 2 parts:

  1. The halfway Healthcare business (selling Tiger Balm)
  2. The ancillary investments they hold

What are nan investments you ask?

Well broadly they are:

  1. $2.2 cardinal liking successful UOB
  2. $450 cardinal liking successful UOL Group

That’s $2.6 cardinal successful assets location astatine latest marketplace prices, for a institution that only has $27 cardinal debt.

Given that Haw Par trades astatine a $2.15 cardinal marketplace cap.

You’re fundamentally buying nan UOB liking astatine marketplace prices, while getting everything other for free, that includes:

  1. The $450 cardinal UOL stake
  2. The halfway Tiger Balm healthcare business
  3. The spot portfolio successful Singapore, Malaysia and Thailand (see below)

So yes, I wholly get that this is simply a Warren Buffet benignant of stock.

What are nan risks pinch this Dividend Stock?

The consequence (or problem) pinch this dividend banal I suppose.

Is that nan floor plan looks for illustration this:

Despite each it has going for it, nan stock value has gone obscurity since precocious 2022.

Yes you are getting a 4.1% dividend output while you wait, but that’s not astonishing erstwhile you tin get 3.75% connected a T-Bill pinch zero risk.

The main problem is that nan banal needs immoderate benignant of catalyst to unlock nan value.

If Haw Par decides to administer retired each their UOB shares to shareholders for example.

Or waste immoderate properties to dividend retired nan proceeds.

Those could beryllium gamechangers.

If they don’t, this dividend banal could enactment rangebound for a while.

I cognize immoderate of you would reason that’s a bully thing, arsenic it provides opportunities for investors to accumulate positions.

But I’ve been investing connected nan SGX agelong capable to cognize that sometimes, inexpensive stocks tin enactment inexpensive for a long, agelong time.

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Keppel Infrastructure Trust

Price: $0.455

Market Capitalisation: $2.5 billion

Dividend Yield: 13.5% (including typical dividend), 7-8% (without typical dividend)

Price to Book Ratio: 2.87x

What I for illustration astir this Dividend Stock / REIT? (yes for nan grounds I cognize this is simply a business trust)

I for illustration that Keppel Infrastructure spot holds a bully operation of infrastructure assets, that supply a decent hedge against inflation.

The measurement nan macro is mounting up, I fishy infrastructure assets whitethorn do good this decade, and Keppel Infrastructure Trust is 1 measurement to play this secular trend.

Dividend output is decent too.

If you see nan typical dividend you’re looking astatine a 13.5% dividend yield.

But that’s one-off, truthful realistically it’s much for illustration a 7% – 8% dividend yield.

What are nan risks pinch this Dividend Stock / REIT? (yes for nan grounds I cognize this is simply a business trust)

As shared successful a previous article – I was not a instrumentality of their determination to bargain Ventura, nan Australia autobus company.

The measurement I spot it, Keppel Infrastructure Trust has zero competitory advantage successful moving an Australia autobus company, which is simply a highly operational business that requires adjacent connected nan crushed contact.

Worse still – they request to do an equity fundraise to finance nan deal, into a marketplace that is still rather weak.

All of this will unit nan stock value successful nan adjacent term.

Keppel Infrastructure Trust conscionable provided a Q1 update.

Showing a 29.1% drop successful distributable income.

Which brings america to nan adjacent rumor – business trusts person a bad estimation pinch Singapore investors.

Remember nan fiasco pinch business trusts for illustration HPH Trust, Accordia Gold Trust and truthful on?

This equine is aged capable to retrieve erstwhile Keppel Infrastructure Trust utilized to beryllium known arsenic CitySpring Infrastructure Trust, and really nan capacity has been decidedly mean for a agelong clip some earlier / after.

So I get why Singapore dividend investors are somewhat wary of this business trust.

Business Trusts are much for illustration operating companies, and nan measurement to measure them is very different from a accepted REIT.

For example, concepts for illustration Price/Book are not truthful meaningful for business trusts, you really person to measure them for illustration an operating company.

How nan 29.1% driblet successful distributable income will impact nan adjacent distribution, it’s not truthful clear for now.

All successful that’s rather a spot of adjacent word headwinds.

CapitaLand Ascendas REIT

Price: $2.58

Market Capitalisation: $11.2 billion

Dividend Yield: 5.9%

Price to Book Ratio: 1.14x

 

What I for illustration astir this REIT?

It’s funny because I retrieve successful precocious 2022 erstwhile nan Fed complaint hikes rhythm started, I said that I would bargain Ascendas REIT successful nan mid – debased $2s.

Many investors laughed maine retired of nan room then, and said they would backmost up nan motortruck if it ever went there.

Well CapitaLand Ascendas REIT trades astatine $2.57 today, and nan aforesaid investors are engaged loading up connected slope stocks instead.

The marketplace is funny for illustration that.

CapitaLand Ascendas REIT holds a broadly diversified portfolio of Singapore business property.

I want to attraction exclusively connected Singapore spot this cycle, arsenic I expect a batch of uncertainty for world existent estate. Because of that my liking successful Mapletree Industrial Trust has cooled rather significantly, arsenic they are now 50% exposed to US information centres.

What are nan risks pinch this REIT?

Ascendas REIT is reporting a 6.1% driblet successful DPU for 2H 2023.

This is not pretty, but it’s not arsenic bad arsenic immoderate of nan different REITs.

As pinch each REITs.

The biggest consequence is if liking rates enactment high.

If so, this will deed nan REITs successful 2 ways:

  1. Funding costs will enactment high
  2. Will yet unit existent property prices (higher headdress rates)

As to wherever liking rates will spell successful nan adjacent 12 – 18 months, boy that’s an full article by itself.

The agelong and short is that it really could spell either measurement – it’s going to travel down to really argumentation makers respond successful nan months ahead.

Because of that I deliberation investors should clasp comfortable rate levels, and position your portfolio to use successful some scenarios (interest rates to enactment precocious to curb inflation, and liking rates being trim to juice economical maturation – you tin spot my portfolio positioning connected FH Premium).

The measurement nan REITs are priced, we could spot meaningful upside if liking rates are trim successful a large way.

But of course, if liking rates enactment precocious REITs are going to beryllium scope bound astatine champion (worst lawsuit location whitethorn beryllium much downside).

Keppel DC REIT

Price: $1.75

Market Capitalisation: $3.0 billion

Dividend Yield: 5.3%

Price to Book Ratio: 1.31x

What I for illustration astir this REIT?

One connection (or possibly three) – Singapore Data Centres.

Singapore Data Centres are a uncommon and prized plus people because nan Singapore authorities restricts nan magnitude of caller information centres that tin beryllium built (to debar overstressing nan section energy grid).

Yet Singapore information centres are highly sought aft by exertion companies because of Singapore’s precocious connectivity and unchangeable infrastructure.

This has made Singapore Data Centres a uncommon and prized plus class.

Keppel DC REIT has dropped almost 45% from nan COVID highs, which has opened up an absorbing buying opportunity for agelong word investors to build a position successful Singapore information centres.

What are nan risks pinch this REIT?

Part of nan logic for nan caller diminution successful stock value is because of nan bankruptcy of nan tenant successful nan Guangdong information centre.

This has astir a 15% effect connected nan DPU, truthful nan effect is not small.

No uncertainty this will bent complete nan REIT, pressuring stock value successful nan adjacent term.

Similar to Ascendas REIT – higher liking rates will besides effect Keppel DC REIT.

We’ve discussed this above, truthful I won’t belabour nan point.

Closing Thoughts: Top 5 Dividend Stocks aliases REITs I whitethorn bargain successful 2024 – for dividend output / superior gains (as a Singapore Investor)

Final thought from me?

In this caller authorities wherever T-Bills salary 3.7% consequence free.

Money is nary longer free.

And erstwhile money is nary longer free and carries an opportunity cost, this has profound implications for each plus classes crossed nan board.

Because of that I would opportunity value matters… a lot.

A awesome institution bought astatine nan incorrect value tin enactment level / underwater for a agelong time.

So identifying nan correct institution is 1 thing, you besides request to bargain it astatine nan correct price.

I didn’t really touch connected pricing successful this article, but you tin spot my afloat full banal and REIT watchlist (with value targets) connected FH Premium.

And fixed really this is simply a caller authorities of liking complaint volatility.

I mightiness moreover spell truthful acold arsenic to opportunity if nan dividend stocks person tally up a lot, it whitethorn not wounded to fastener successful immoderate profits, and bargain it backmost if / erstwhile nan value comes backmost down.

But yes I cognize this is simply a much progressive attack that whitethorn not beryllium suited to each investors.

So it really goes backmost to nan benignant of investor you are.

You tin spot my afloat portfolio connected FH Premium, wherever I supply regular updates erstwhile I bargain / waste stocks aliases REITs (or if I alteration my mind connected a banal aliases REIT). 

I besides stock my afloat banal and REIT watchlist connected FH Premium, together pinch my value targets.

This article was written connected 10 May 2024 and will not beryllium updated going forward.

For my latest up to day views connected markets, my individual REIT and Stock Watchlist, and my individual portfolio positioning, do subscribe for FH Premium.

Running a 5.5 waste for nan FH Stocks Masterclass and REITs Masterclass!

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