Since DBS began its share buyback programme, it has bought back 4.05 million shares at an average price of $43.56, at prices ranging from as low as $41.84 to as high as $44.95.
With the buybacks, Lee notes that DBS shares have appreciated by 4.5% from $41.85 as of Nov 27 close to $43.74 as of Dec 13 close.
Lee calculates that the $3 billion committed by DBS can buy up to 68.2 million shares, assuming an average price of $44 per share. However, the total number of shares that can be bought under the current mandate is capped at 51.58 million shares, which works out to as high as $59 per share for the remaining 47.5 million shares, given how 4.05 million shares have been bought back.
Lee also points out that the bank's quarterly dividend payout of 54 cents per share, or $2.16, works out to an annual yield of 4.9% based on the Dec 13 closing price of $43.74.
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In contrast, the most recent 6-month T-bill on Dec 5 closed with a cut-off yield of 3%, down from as high as 3.8% on March 27.
Lee notes that an average of $14.7 billion went into each 6-month T-bill auction with a total issue size of some $6.66 billion.
"The excess fund is likely to look for better returns with lower yields from T-bills," says Lee.
With Donald Trump's win, policies might change and tariffs imposed, hurting global trades and high inflation, resulting in higher market volatility in the months ahead, leading to defensive and good dividend-yielding stocks gaining more favour.
"We believe Asia is likely to remain fairly resilient and the Singapore market will continue to offer healthy dividend returns," says Lee.
With "good price support and healthy dividend yield", she has raised her fair value from $43.60 to $45.20, based on an "undemanding" price-to-book ratio of 1.8x and a decent dividend yield of 4.8%.
DBS shares gained 0.91% to $44.14 as at 2.30 pm, extending a year-to-date gain of 45.92%.
