Personal Investing - By Ooi Kok Hwa
DUE to the current low interest rate environment, a lot of investors may be wondering whether there are investments that can provide returns higher than fixed deposit (FD) rates.
Despite the current high stock prices on Bursa Malaysia, there are still many stocks providing dividend yields higher than the current FD rate of about 2% to 2.5%.
Based on our estimation, the average dividend yield for all stocks on Bursa Malaysia is about 3.5%, which is higher than the current 12-month FD rate of 2.5%.
Nevertheless, investors need to have critical financial information, adequate investment skills as well as be willing to spend time researching information.
There are many research companies providing information on Main Market companies on Bursa Malaysia based on their highest dividend yield, lowest price-earnings ratio (PER) as well as lowest price-to-book ratio (P/BV).
For serious investors, they need to familiarise themselves with these terms. In addition, investors need to know how to analyse the information.
In this article, we will explain how to use the dividend yield ranking. The table shows the top 10 Main Market companies according to highest prospective dividend yield.
Prospective dividend yield is calculated by taking the market price divided by the estimated current year dividend per share (DPS).
For example, Hektar Real Estate Investment Trust (Hektar REIT) shows a prospective dividend yield of 9.53%, which was computed based on the market price of RM1.07 (as at Oct 18) and estimated 2009 DPS of 10.2 sen.
The latest actual dividend yield of 10.01% for Hektar REIT was computed based on the same market price but divided by last year’s actual DPS of 10.71 sen.
Even though the dividend yield for 2009 is anticipated to decline slightly to 9.53% from 10.01% in the previous year, it is still much higher than the current FD rate of 2.5%.
However, investors need to be careful as some of the high dividend yields may be due to one-off special dividend payments.
The companies may not repeat these dividend payments in the following year. Besides, we need to make sure that the latest PER is lower than the overall market PER.
This is to prevent us from paying too high a price against its earnings level. For Hektar REIT, its latest actual PER of 9.45 times is lower than the current market PER of about 11 to 12 times.
This method does not require a lot of time to carry out research. Once we identify good fundamental companies that are paying high dividends every year, we only need to monitor them.
We may not even need to sell the stocks for a long period of time if the companies continue to reward good dividend yields that are higher than FD rates.
DUE to the current low interest rate environment, a lot of investors may be wondering whether there are investments that can provide returns higher than fixed deposit (FD) rates.
Despite the current high stock prices on Bursa Malaysia, there are still many stocks providing dividend yields higher than the current FD rate of about 2% to 2.5%.
Based on our estimation, the average dividend yield for all stocks on Bursa Malaysia is about 3.5%, which is higher than the current 12-month FD rate of 2.5%.
Nevertheless, investors need to have critical financial information, adequate investment skills as well as be willing to spend time researching information.
There are many research companies providing information on Main Market companies on Bursa Malaysia based on their highest dividend yield, lowest price-earnings ratio (PER) as well as lowest price-to-book ratio (P/BV).
For serious investors, they need to familiarise themselves with these terms. In addition, investors need to know how to analyse the information.
In this article, we will explain how to use the dividend yield ranking. The table shows the top 10 Main Market companies according to highest prospective dividend yield.
Prospective dividend yield is calculated by taking the market price divided by the estimated current year dividend per share (DPS).
For example, Hektar Real Estate Investment Trust (Hektar REIT) shows a prospective dividend yield of 9.53%, which was computed based on the market price of RM1.07 (as at Oct 18) and estimated 2009 DPS of 10.2 sen.
The latest actual dividend yield of 10.01% for Hektar REIT was computed based on the same market price but divided by last year’s actual DPS of 10.71 sen.
Even though the dividend yield for 2009 is anticipated to decline slightly to 9.53% from 10.01% in the previous year, it is still much higher than the current FD rate of 2.5%.
However, investors need to be careful as some of the high dividend yields may be due to one-off special dividend payments.
The companies may not repeat these dividend payments in the following year. Besides, we need to make sure that the latest PER is lower than the overall market PER.
This is to prevent us from paying too high a price against its earnings level. For Hektar REIT, its latest actual PER of 9.45 times is lower than the current market PER of about 11 to 12 times.
This method does not require a lot of time to carry out research. Once we identify good fundamental companies that are paying high dividends every year, we only need to monitor them.
We may not even need to sell the stocks for a long period of time if the companies continue to reward good dividend yields that are higher than FD rates.
85 comments:
hng,
i have parked my C to sell at 4.34 yesterday but did not matched. Would most likely to sell again tonight if market surge higher. Hope it can fill. :)
See you have invested all your bullet, may the force be with you and reap all profit at one shot. :)
All the best bro..
horse
Good, hope everthing go as your plan :)
At the moment, its all waiting game for my portfolio to perform.
hng,
Not tracking ur portfolio. Just wanted to know the gaps. U are in the millionaire league....while i'm in the thousands. So i guess i need to be like horse to set u as our model. I'm just glad everyone is making money.
Just sold off all Amfirst at 1.06; realize few hundred profi :)
Steve
Million can't buy even semi-D in city; thing are so expensive nowadys, have to get bank loan and live below mean to expedite wealth accumlation till financial freedom. Have to continue work hard, to paid off all loan :(
horse, have great potential to be intelligent investor and decisive investment view, he is global investor: US, Sing, Msia, next target HK :) etc
horse n Steve
Mind sharing your age, no of yr in stock investment and your investment philosophy.
hng,
as told in my previous posting, i am now more on dividend play as i have gone through almost 4 cycle of klse crashed and burn myself badly after gaining good money the first try in market and vomit out back with even more loses after the first crash of klse. A heavy lesson to pay during my infancy in stock investment, now tame down to be more discipline and cautious, only quality & dividend stock that i'm interested in, no more speculation where i used to practise long time ago. When i started trading, only active counters interest me as making money is just fast & easy and betting became heavy due to greed, during that time never know what is risk, only quick money is my concern. When it crashed, i started to realise my way is totally wrong. I stop for quite a long while before assuming back in 2003. Here i am, aiming 7% to 15% annually is good enough but i think this year can surpass my target. :)
bought more Pratosco at 95sen; Sign at 1.60 and hingyap at 1.09
horse
With your buy and hold strategy and aim only for good fundamental bluechip cum high dividend stocks, return of 15% should be no problem. If can maintain consistency and compound return, in time your investment can surpass your monthly salary (Just like my brother in law, even already derive consistent and higher income from investment, still wanna to be employ with aim to gain control one of the listed company in future, to be major shareholder :)
As global investor, you also stand a good chance to achieve more due to currencey factor which act as an edge tool and amplified your return.
Example: Overall average return of 15% became 35%.
Msia market : 15%
Singapore market: 15% x 2.5 = 38%
US market: 15% x 3.5 = 52%
Core portfolio
Hingyap 63.5%
Lonbisc 8.9%
Protasco 13.6%
Cheetah 5.1%
Sign 3.4%
Trading portfolio
TA global + ICPS 75%
Genting 30%
hi hng
I'm 32. I guess u should be younger. I think I start off 5 yrs ago. I mean actively. Before that i do monitor and play abit here & there and trying to get to know more about share market. I think i'm like horse as well. Looking for high dividend stk.
Steve
I'm 3 yr older than you, good to see you have initiate investing based on good fundamental and high dividend stocks.
Unlike me and horse, both of us have gone through very-very painful past experience.
Wow! Maxis make strong debut today, open at 5.46, up more than 10%, with high volume.
My Genting in profit now, up 7sen :)
Just sold off all Genting at 7.15, realize few hundred porfit :)
wow, maxis is about 60sen profit for retailer. not bad for those who sucessfully subscribe the IPO. :)
horse, wanna to jump in Maxis bandwagon?
Market say Maxis can up as much as RM6 within 6 month, and reaffirm that Maxis is share that everyone must have in portfolio due to premium brand. Needless to say, just court me out :)
Bought more Prostaco at 94.5sen
no, not on Maxis this time round. Let the dust settle first. I would prefer AXIATA compare to maxis in term of future growth. Just sitting sideline and watch how Maxis will end up in 3 months time to come, at least the 1Q result after listing.
I agree with you, For telco,
Axiata: Growth+liquidity
Maxis: Premium+liquidity+income
TM: : Income+liquidity
Digi: Income
bought more Protasco at 95sen in afternoon session
Core portfolio
Hingyap 63.5%
Protasco 30.3%
Lonbisc 8.9%
Cheetah 4.4%
Sign 3.4%
Trading portfolio
TA global + ICPS 75%
hng,
do u know which BC being kicked out since maxis became one of 30 KLCI.?
horse
I think is MAS if no mistaken.
Bought Protasco at 94-94.5sen in early morning.
hi hng,
I read that NSTP is paying special dividend of 40c T.E.
At the current price at 2.40, it is give a good dividend yield. Is that true?
Steve
MediaPrima intend to take over NSTP by swap share and warrant. The special dividend payout is part of the takeover plan. Thus, dividend is unsustainable, buying NSTP now may end up getting Media after EGM pass the takeover plan.
Bought more Protasco at 95sen; Hingyap at 1.09
wow, keep buying Hingyap & Protasco huh... :)
When it move 10% up u would have enough for this month and can afford to rest for a while.. :)
Steve also accumulating as well, when disposing don't clash to each other... hahaha..
horse
I'm accumulating more Protasco (motivate buying) and just buy little on Hingyap as still have time to accumulate more next wk.
I'm expecting dividend from Protasco soon and expect its earning to be resilient as cost of petroleum product have gone down and recently been award with several concessionaire contract to maintain state roads.
Protasco is one of the few construction counter that have high earning visibility and stable earning growth and consistent dividend payout.
Net cash: 30sen/share
1H EPS= 7.15sen; FY10: 14sen
PE: 6.7x; NTA: 1.15
dividend: 8- 11sen;
yield: 8.4 - 11%
horse
At current share price: Hingyap at 1.09, Steve already on 10% paper profit. If after announcement, steve can easily reap 20% profit margin which is much higher than me.
horse
As global investor, you stand to reap not only profit margin from oversea stock, but also amplified your gain by currency factor :)
No so much on currency factor as it can go either way by the fluctuation of currency rate. Simple rule apply to all bourses "buy low sell high" no magic. :)
wow, GAB is rallying when the ex-date drawing nearer.. :)
horse
GAB already up almost 2x of its dividend since announcement. Cuurent price is highest in its historical record. Still keep for long term investment ?
horse
What i mean conversion in currency rate is every 1% gain in US dollar = 3.5% gain in RM.
just bought more Hingyap at 1.09
dont think will sell GAB when it still paying good dividend and my average buying price is < RM2.
sorry its < RM3 for GAB. :)
GENM still holding steadily :)
GAB fundamental still very solid, valuation may be rich but it balance sheet still very strong, and in net cash position. In fact GAB can afford to payout even higher net earning from 90% to 100%.
Well, Good stock are deed to keep forever, and feeling associate with good stock are just as nice as have good business partner. Ha! you can enjoy free beer everytime you attend its AGM :)
Sold off all Sign at 1.63; realize few hundred profit. TA global is due to list on Monday. Wait for its performance then.
Core portfolio
Hingyap 67.8%
Protasco 48.9%
Lonbisc 8.9%
Cheetah 4.0%
Trading portfolio
TA global + ICPS 75%
hng,
Good to know u r loading up more on hingyap. I'm buying more as well because i don't think i can get any lower than current price bcoz been monitor for few day, KLSE drop 10 point also, she maintain the same price. If not mistaken, Hinyap will be releasing their quaterly report end of the month. Wht ur view?
Sold off all TA global at 50sen, get back half of the capital back first.
Sold off all TA-global-PA all a 39-39.5sen; realize one time big lose
HA! Bought back all TAGB at 48.5sen; TAGB-PA at 38.5sen
Yes! TAGB at 50.5sen, now. Today must aim to at least breakeven all TAGB
Sold back all TAGB at 50.5sen and TAGB-PA at 43sen, mitigating loss first
Bought back all TAGB at 49sen and TAGB-PA at 40.5sen
Sold back all TAGB at 49.5sen and TAGB at 41.5sen, mitigating further loss
bought back all TAGB at 48.5sen; TAGB-PA at 40sen
Sold back all TAGB at 49sen; TAGB-PA at 40.5sen
Manage to cap TAGB and TAGB-PA loss less than 10k, need at least 2more round of intraday trade to breakeven :(
Steve
Hingyap is expect to announce Q1 result and together will announce dividend and special dividend by end this week. As Hingyap nature buiness, Q1 will be strongest result due to festive session.
I'm no buying any hingyap and other stocks at the moment, have to concentrate my effort on TAGB to breakeven or further narrow the loss.
hng,
wow, very actively trading with TAGB, listing of TAGB started off with disappointment :(
TA as well in red zone.
I am still seating sideline patiently, waiting for GENM to inch up higher. :)
horse, GENM up as high as 2.95 in early morning. Wanna to keep for 3.00?
Genting slump in afternoon session, aiming to buy if unable to trade TAGB.
Today realize almost 10k one time loss on TAGB, write off about half of the profit on these month :(
bought TAGB at 47.5sen; TAGB-PA at 39sen
Sold off all TAGB at 48sen; selling TAGB-PA at 39sen now
Portfolio unable to breakeven or narrow further loss of TAGB and TAGB-PA :( recognized total net of 9.7k loss :(
Portfolio today, add some Lonbisc at 1.03 and Protoasco at 95sen; add new 2 stocks: crestbld at 70.5sen; KSL at 1.21, all in the afternoon session.
Core portfolio
Hingyap 67.8%
Protasco 51.5%
Lonbisc 11.4%
Cheetah 3.3%
KSL 2.6%
Crestbld 2.3%
bought TAGB at 47.5sen; TAGB-PA at 39sen
sold off all TAGB and TAGB-PA at 48sen and 39.5sen; realize just few hundred intraday profit.
Market trade sideway and low volume make difficult to trade.
Shorted week ahead in local and US market as well as school holdiay, volume today may record new low!?
yea, notice the volume is low. School holiday likely the cause of it.
yesterday, i've added more IOICORP at 5.54 to subscribe the right issue.
horse
Based on today share IOI response. Once IOIcorp right share listed, you stand to reap handsome profit on right share or right for the right share :)
I'm shifted my focus back to core stock: bought some Hingyap at 1.10
Bought glomac at 1.25
Market in negative territiory! sentiment remain weak and trading become thinner...
Protasco has start performing, hopefully when result and dividend announce, stock can fly up further :)
In red zone, low volume & no direction. :(
GENM being bashed down 5sen, GENTING went on a different direction. GEnting SP still hovering between 1.05 to 1.13.
Really not much excisement. :(
Genting group company are due to announce financail result: Market have high hope on GENM to declare special dividend to help Genting pare down borrowing cost
Wow! Maxis at 5.20; down 11sen !? Nonetheless, retail still enjoy 9%, institution still have 4% easy profit from their IPO.
Bought more Protascoa at 96sen; glomac at 1.25
Market summary: Market turn red to green finally. Maxis closed at lowest price, 5.20; Genting gain strongly and GENM narrow loss. European market open in red zone.
Core portfolio
Hingyap 69.6%
Protasco 62.1%
Lonbisc 11.4%
Glomac 8.9%
Cheetah 3.3%
KSL 2.6%
Crestbld 2.3%
Bought TAGB at 44-45sen; TAGB at 36-36.5sen
Both TAGB and TAGB-PA rebound strongly, I'm waiting to breakeven previous loss or perhaps can even record positive return :)
Yeah! breakeven target achieved : sold back all TAGB at 47sen;
sold back TAGB-PA at 38sen;
Wow!! what a narrow escape!, both TAGB and TAGB-PA resume weakness.
Bought back TAGB a 45.5sen and TAGB-PA at 37sen :)
Very soon, sold back TAGB a 46sen and TAGB-PA at 37.5sen :), realize few k intraday profit :D)
I think is enough to trade TAGB and TAGB-PA, afterall, already so lucky to breakeven earlier loss and still record some profit. It time to kick out these two 'dangerous' newly listed counter from my radar screen.
Better shifited back to more fundamental strong counter
Here you are, both Genting and GENM on weakness now. Time to buy!
bought GENM at 2.83
bought cresbld at 70.5sen and protasco at 96-96.5sen
bought Genting at 7.06
wow, just did an intraday profit on GENM bought 2.83 and sold 2.87 last minute. :)
COngrat to you hng, manage to breakeven. :)
horse
Yes, i'm also sold back all GENM at 2.87, realize more than 1k intraday profit
The loss in TAGB and TAGB-PA of about 10k, just make me very uncomfortable as it is biggest loss in record, it feel been defeated and dampen my confident in stock market. It just prompted me to try my best to recoup this loss as soon as possible and wining back my confident in stock strategy. I'm consider today is my lucky day, and have capitalize on these counter volatility and successful recoup loss. Nonetheless, i've kick out these counter and blacklist them for causing such confusion.
Both of my biggest core stocks Hingyap and Protasco are performing well. If everthing go as plan, portfolio stand to reap highest profit in this yr :D)
Core portfolio
Hingyap 69.6%
Protasco 66.3%
Lonbisc 11.4%
Crestbld 10.6%
Glomac 8.9%
Cheetah 3.3%
KSL 2.6%
Trading portfolio
Genting 8.4%
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