Invest into Singapore banks
Many investors like stocks that pay a decent dividend yield. But we need to check if the dividend yield is sustainable.
Dividend yield is only sustainable when earnings is stable or growing.
When earnings is growing, we will see the yield growing. This will result in rising share price as well.
Singapore banks have shown strong growth in their non-interest income, particularly wealth management fees. In the past decade, wealth management fees across all three banks have grown significantly from a mere 5% to a third of total fees income. With the emergence of a wealthy middle-class in Asia, wealth management will be a strong growth engine for the Singapore banks in the long-run.
In 2019, overall loan growth will be pulled back due to several external factors such as the property cooling measures and global slowdown. However, there are still some bright spots in Singapore's loan market, such as building & construction and transportation loans, to help pick up the slack that is left behind by the mortgage loans. There are sustainable construction demand coming from the public sector, with major projects such as the Changi Terminal 5. The majority of the remaining 40% will be from the redevelopment of successful en-bloc sites transacted between 2017 and 2018.
The average forward dividend yield of the Singapore banks stands roughly at 4%, and the respective management has constantly reaffirmed their commitment to a steady and sustainable payment of dividends. Given that the average payout ratio of 50% is also at a healthy level, this should provide investors with adequate assurance that future dividends will be sustainable.
DBS, OCBC and UOB have built a track record of delivering continuous growth in total income, earnings, and dividend payments to its shareholders over the past 10 years.
They are all consistently ranked among the world’s top 50 safest banks by Global Finance.
Link: https://www.businesstimes.com.sg/companies-markets/singapore-banks-shine-in-worlds-safest-banks-2017-rankings
Dividend yield is only sustainable when earnings is stable or growing.
When earnings is growing, we will see the yield growing. This will result in rising share price as well.
Singapore banks have shown strong growth in their non-interest income, particularly wealth management fees. In the past decade, wealth management fees across all three banks have grown significantly from a mere 5% to a third of total fees income. With the emergence of a wealthy middle-class in Asia, wealth management will be a strong growth engine for the Singapore banks in the long-run.
In 2019, overall loan growth will be pulled back due to several external factors such as the property cooling measures and global slowdown. However, there are still some bright spots in Singapore's loan market, such as building & construction and transportation loans, to help pick up the slack that is left behind by the mortgage loans. There are sustainable construction demand coming from the public sector, with major projects such as the Changi Terminal 5. The majority of the remaining 40% will be from the redevelopment of successful en-bloc sites transacted between 2017 and 2018.
The average forward dividend yield of the Singapore banks stands roughly at 4%, and the respective management has constantly reaffirmed their commitment to a steady and sustainable payment of dividends. Given that the average payout ratio of 50% is also at a healthy level, this should provide investors with adequate assurance that future dividends will be sustainable.
DBS, OCBC and UOB have built a track record of delivering continuous growth in total income, earnings, and dividend payments to its shareholders over the past 10 years.
They are all consistently ranked among the world’s top 50 safest banks by Global Finance.
Link: https://www.businesstimes.com.sg/companies-markets/singapore-banks-shine-in-worlds-safest-banks-2017-rankings
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