On May 18, Keppel announced that one of its largest monetisation plans, that of the sale of M1 to Simba for $1 billion, had not been approved by IMDA. If M1’s sale had materialised, shareholders would have received up to 15% of the $1.4 billion in completed monetisations in 2026.
Still, about nine of the STI components, outside the eight REITs and three banks, have announced various forms of capital returns. REITs with joint ventures and overseas assets may allocate some of their distributions per unit (DPU) from capital. Those elements of DPU are likely due to its structuring for tax efficiency. In addition, REITs may top up their DPU by using profits from asset sales to fund asset enhancement initiatives.
Outside of the REITs, the banks announced capital returns in the form of special payouts and/or share buybacks. With bank prices at or near their highs, management at both OCBC and DBS has suggested they may return capital through special dividends if they do not complete the share buybacks they announced in 2024 and 2025.
Separately, the management of Singapore Airlines (SIA) announced a capital return of 10 cents over three years starting in FY2026 (SIA has a March year-end). SIA’s group CFO stated more than once during its results briefing on May 15 that the group does not have a dividend policy. Nonetheless, in FY2026, excluding the capital return, SIA paid ordinary dividends of 22 cents (final) and 5 cents (interim), totalling $850.9 million, translating into a payout ratio of 71.8%.
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Singapore Telecommunications has a value realisation dividend of 3–6 cents per year, in addition to an ordinary dividend. The value realisation dividend is funded by excess capital generated from asset recycling proceeds after investing in growth initiatives.
Since 2024, when Hongkong Land introduced a new strategy, its management has announced plans to divest assets at net asset value and use around 20% of the proceeds to buy back shares at a discount. Hongkong Land has also announced plans to double its ordinary dividends by FY2035 from its FY2025 level.
Analysts and possibly their institutional investors pressured the banks to return capital. Hence, all three banks announced clear dividend policies and capital return strategies over a set timeframe. This has resulted in the banks’ dividend yields ranking among the highest in the local market.
