For investors, the impact is about seven to 11 cents per share in terms of special dividends group CEO Loh Chin Hua had said on May 18. Keppel’s capital management policy is to distribute 10-15% of proceeds from non-core asset sales to shareholders.
Part of FY2026’s ordinary dividend will comprise earnings from the sale of Keppel Merlimau Cogen to Keppel Infrastructure Trust for $128 million as Loh says any payout from the sale will be part of ordinary dividends. Keppel’s FY2025 ordinary dividends comprised 15 cents interim dividend and 19 cents final dividend. In addition, Keppel Sakra Cogen will be commissioned in the middle of this year
However, Mervin Song, an analyst at JP Morgan has just upgraded Keppel to overweight from neutral, with a five-cent higher price target of $12.05 for end-June 2027.
“We had been concerned about the slower pace of asset divestments and FUM growth due to the Middle East conflict, and the risk of revised terms or failure to secure regulatory approval for the M1 disposal. These risks have largely crystallised, with the failed M1 sale and Keppel returning -10.4% (including dividends) since March, lagging the STI’s 4.6% rise. We turn more positive as expectations and positioning have reset lower, with relative valuations and share price performance to peers having normalised,” Song says in his report.
See also: Analysts maintain ‘buy’ on Lendlease REIT following 3QFY2026 business update
Song is forecasting a dividend of 42 cents for FY2026. In FY2025, Keppel paid an ordinary dividend of 34 cents, and a special dividend of 13.5 cents which included a dividend-in-specie of Keppel REIT. JPMorgan's 42-cent dividend forecast comprises an ordinary dividend of 34 cents and a special dividend of 8 cents. Song estimates the special dividend as 15% payout from $260 million of divestments announced in 2025 and completed in 1Q2026, and potential sale of two Bifrost pairs raising at least $250 million.
“In our view, Keppel’s pivot towards becoming a global asset manager remains on track and earnings should benefit from the ramp-up at the new Sakra plant. We see the risk-reward as attractive, with DPS of 42 cents implying a 4% yield, which should provide downside support.
“Several investors have said to us they view this as an attractive “paid to wait” level while Keppel pivots to a global asset manager,” Song says.
