Wednesday, May 14, 2014

Cherry-Picking SGX Dividend Stocks

Over the weekend and the Vesak Day holiday, instead of studying for my CFA or going out to relax, I spent my time doing something else that I've wanted to do for a long time.

I slowly went through the entire SGX list of stocks, and I have shortlisted 45 non-REIT stocks that seem to me to be good dividend stocks!

My criteria was quite simple, just a business that consistently pays out dividends, pays dividends conservatively (EPS is always larger) and with a business model that isn't too complicated or hard to understand.

As it turns out, about only 12-18 of these stocks are property related, depending how you would want to classify them. That is a good thing, because I am trying to build a diversified income portfolio. Since a significant portion of my investments would go towards REITs because of their high yield, I want to minimize the exposure I have in the property market and related industries.

The top few names which I am looking at now are: CSE Global, Duty Free International, Food Empire, PEC, Qian Hu, Sing Investments and Finance and TeleChoice International.

These 7 names looks horrible for sure, which is why they look good to me.

CSE Global: P/E of 12, dividend yield looks sustainable at 5%. Business looks a bit complex, but it is a pretty big company. They do big construction projects on telecomms and environmental applications. Not my best bet.

Duty Free International: P/E or 13, the average dividend yield of the past 4 years is 6%. Trading at double the current NAV. The business looks simple to understand, selling duty free and operating a hotel in the heart of KL. I like the vice perspective of this business, haha. Geographically only exposed to Malaysia.

Food Empire: P/E of 11.6, dividend yield hovering between 1-3%. Nothing too great about it, but it is a business that is spread out and has it roots. Food company that distributes all over Asia with a strong presence in Russia.

PEC: P/E of 11.3, but dividend yield seems to be at least 4% for this year. What I really like about this stock is the deep NAV discount that is present, about 35%. Engineering company that does projects and maintenance.

Qian Hu: Trading at a 22% discount to it's NAV, dividend yield is about 6% on average. Not a tough business model to understand either. Rear fish, sell fish. Earning is bad though, seems like a wild card.

Sing Inv and Finance: Implied 30% "discount" to NAV, while the P/E is high at 18. Very strange, I don't really understand the financial statements. A bank that lost money last year. Tough cookie.

TeleChoice: Interesting at P/E of 10, but with a NAV premium. 51% backing by Temasek Holdings, can it go wrong? Dividend yield implied at about 6%. Telecom distributor and network solutions for the region.

My personal top 3 picks would be Qian Hu, TeleChoice and then PEC.

I would pick up QH at $0.085, TeleChoice at $0.225 and PEC at $0.535-0.545.

Maybe I'll pick up a lot of each or more the next time they drop to those levels. I will see! Anyway, the main point of this post was just to let people know that there are actually a lot more choices for dividend (income) investing in Singapore that you might have never heard of, but with interesting businesses other than just REITs and the blue-chips.

1 comment:

  1. Nice blog discussing about the SGX stocks. Try best SGX Hot Stock Picks to trade profitably under positional stocks of Singapore market.


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