Looking for yield?
Investors seeking alpha can find high yielding stocks on the local market. Although analysts are sounding more cautious on the banks’ outlook, they have more or less promised ordinary and special dividends this year. But their 1H2025 results are likely only to be announced in early August.
Some analysts suggest that City Developments may announce a special dividend following the completion of the sale of its 50.1% stake in South Beach.
See also: STI moves ahead at snail's pace as investors find haven in SGD assets
A property stock that has already announced a special dividend is Bukit SembawangEstates. On May 26, it reported its FY2025 financial results (the developer has a March year-end). The company announced an ordinary dividend of 4 cents and special dividend of 16 cents. This represents a dividend payout of 45%. The total dividend - with the ex-date yet to be announced - translates into a yield of 5%.
Bukit Sembawang trades at a narrower discount to net asset value of 0.64x compared to other developers such as CDL, UOL Group and Frasers Property. Bukit Sembawang has a more liquid balance sheet with no debt, most of its development properties in Singapore and net cash of around $582 million. Against this background, the stock’s NAV comprises more than $2 of cash rather than assets. Of course as a developer, earnings can be volatile. Free cash flow was positive in FY2024 and FY2025 but was negative in FY2023.
There is no analyst coverage and unlike CDL the stock doesn’t have a specific catalyst such as the sale of South Beach.
See also: STI set to creep towards 4,000 but US risk-free rate remains elevated
Global markets
Vincenzo Vedda, Global Chief Investment Officer, DWS says he is expecting the US to grow by 1.2% this year. Despite the slower growth, US equities are likely to be driven by earnings. “The S&P 500 in particular is benefiting disproportionately from artificial intelligence (AI) excitement and other digital growth,” he says.
Additionally, companies have learned to adapt nimbly to to external shocks over the past ten years. And, although the Trump administration’s policy is likely to be volatile, Europe’s fiscal policy is likely to expansive, underpinning growth and investment prospects, in Vedda’s view.
The key risk indicator will continue to be the bond market. “If the sharp rise in Japanese government bond yields and concerns about the persistently high U.S. fiscal deficit were to lead to a sell-off at the long end of the yield curve, with foreign investors pulling back from U.S. assets, we would have to revise all our market forecasts,” Vedda warns.
De-dollarisation will be a very gradual process, in his view. “We also assume that the U.S. Federal Reserve (Fed) will intervene if 10- and 30-year Treasury yields rise well above 5%. Conversely, this means that we continue to view bonds as attractive.”
