The yield of the most recent issue of 6-month T-bills has fallen to another multi-year low of 2.56% - a level seen on July 2022 when the Fed fund rates were at 1.5% to 1.75%.
At this level, the yield of this popular investment is barely higher than 2.5% paid for CPF Ordinary Account money.
This could prompt T-bill investors to seek better returns in dividend stocks. REITs, with improving sentiment and attractive valuations of 0.8 times P/B, more than 6% sector yields, will be key beneficiaries as well.
According to DBS Group Research, large-cap REITs favoured are Frasers Centrepoint Trust , CapitaLand Integrated Commercial Trust , Mapletree Logistics Trust and Keppel REIT.
These counters are likely to see and benefit from initial rotation by investors into the S-REITs space.
Three stocks giving a dividend yield of more than 5%, along with steady earnings outlook profiles could also come into focus, says DBS.
The first is DFI Retail Group , which will be paying a final dividend of 7 US cents per share. The company is projected to report earnings growth of 29% for the current FY2025 - an estimate deemed "conservative". There is also scope for a special dividend payout and also M&A opportunities.
ComfortDelGro is likely to see another year of "good" earnings growth, with new contracts and recent acquisitions likely to offset softness in local business segments, says DBS.
Venture Corp, meanwhile, is now trading a 6% dividend yield. It remains net cash position and is actively buying back shares, with a total of 481,000 shares bought back since results release on Feb 21, which is close to 30% of the 1.7 million shares purchased since Nov 2023.
