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Zero interest savings result in flight to dividend stocks?

June 27, 2012 by Kyith 13 Comments

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There seem to be a phenomenon of real estate investment trusts and blue chip dividend stocks running like nobody business.

A review of my dividend stock tracker seem to show a lot of the yield stocks’ yields compressing.

Starhub for no reason ran from $3 to $3.40. All the REITs are doing very well. So much so that there are only a handful of yielders having yields in excess of 8%.

What could be the reason?

Could it be the market volatility result in these stocks being perceived to be safer?

Could the low savings rate and high inflation result in people searching for better yields?

High yielding dividend stocks tend to do best in low growth environment (See article on historical behavior of dividend stocks)

Whatever it is, I am having trouble evaluating risk versus reward to add my monthly savings.

One thing we need to see is for the DPU for these stocks to go up to justify the rises in prices.

To get started with dividend investing, start by bookmarking my Dividend Stock Tracker which shows the prevailing yields of blue chip dividend stocks, utilities, REITs updated nightly.

Make use of the free Stock Portfolio Tracker to track your dividend stock by transactions to show your total returns.

For my best articles on investing, growing money check out the resources section.

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Filed Under: Dividend Investing Tagged With: frasers commercial trust, high dividend stocks, starhub

About Kyith

Founder & Sole Employee of InvestmentMoats.com . Senior Solutions Specialist at Fee-Only Advisory Firm Providend by day. Blogger by night. Active Stock Investor for 15 years. SG & HK Mkts. Pursues Financial Security & Financial Independence. Reached Financial Independence at 38. Facebook , Twitter. More on Kyith ...

Comments

  1. B says

    June 27, 2012 at 10:16 pm

    Haha i was also looking at SPH at around 3.75-3.78 as it looks like the only stock with a relatively nice yield now.

    You have starhub will you sell given the crazy run up these couple of weeks? Its yield has gone down to 5.7% low now…maybe even lower than M1.

    Reply
  2. Drizzt says

    June 27, 2012 at 10:48 pm

    i got invested in sph at 3.78-3.79. i probably wont sell starhub but not infatuated by it. really not much yielder to turn to. and frankly in time of crisis this is the one stock the instuitions will turn to.

    trying to add m1 but turned too fast.only got 3 lots at 2.47

    Reply
  3. Jared Seah says

    June 27, 2012 at 10:59 pm

    If we go to any financial websites nowadays, you can see every other day some “talking-head” will “recommend” dividends stocks.

    Those buying now are paying full retail price for the dividend yields. And a bit late to the game…

    Hey! I am not complaining!

    If the yields come down even lower, I am tempted to sell my high dividend yielders (bought when dividend play not popular).

    Compared to the yields in the States, our SGX dividend plays have more room for yields to get compressed.

    That’s the beauty of Growth and Income play!

    Reply
  4. Drizzt says

    June 27, 2012 at 11:36 pm

    the thing Jared is that u may have misjudge. the crowd can reach for yield when they require it doesn’t mean they are over valued.

    some stocks like m1 and sph are still very low.

    Reply
  5. Gregg says

    June 28, 2012 at 5:52 am

    Hi Jared Seah and Drizzt

    I want to complain, hehe…. starhub and all the reit went up too fast, my cost to accumulate would be higher..hehe..lol

    Reply
  6. Marti says

    June 28, 2012 at 9:33 am

    REITs are somewhat hybrids, they are traded likes stocks but they are actually real-estate. Depending on how you see them, they could appear either expensive of dirt cheap. After all, a direct property investment usually pays less than 3% after cost and taxes.

    Reply
  7. J says

    June 30, 2012 at 2:25 pm

    Most people would recommend investing in REIT. But would this cause the problem of not diversifying sufficiently? With Telcom at such a high price, it is hard to included them into my portfolio. Is there any other industries that pay out high yield dividends?

    Reply
    • Drizzt says

      July 7, 2012 at 11:22 pm

      Hi J, with high returns there may be high risk. Your job as an investor to see whether there are inefficiency such that its high returns for low risk. Don’t be fixated by REIT and Telecoms. start looking for Dividend Growers. At the same time i am looking at those stocks that is lower volatile yet provides reasonable returns.

      Reply
  8. GREGG says

    July 1, 2012 at 8:58 am

    hi J,

    What is the Yield (%) that you are looking at? i believe only REIT can get >7% base on current price.

    Other wise, SIA Engineering would be a good position as well and it is resilient to oil price rises

    Reply
    • Drizzt says

      July 7, 2012 at 11:23 pm

      hi Gregg, i am looking at +/- 6%. hence M1 and SPH. I hope to see their earnings and dividends show growth. SIA engineering have moved up but the yield did not meet close to my critiera.

      What have you uncovered?

      Reply
  9. J says

    July 2, 2012 at 11:11 pm

    Hi Gregg,

    I’m looking for yield that simply more than the inflation rate in Singapore.

    Reply
  10. Gregg says

    July 3, 2012 at 6:25 am

    HI J.

    SIA Engineering, ST engineering, Comfort Delgro, Vicom and SGX are the good dividend play which definitely offer higher than inflation rate.

    Reply
  11. Gregg says

    July 8, 2012 at 9:20 am

    Hi Drizzt,

    Recently I have added SIAEC (only 1 lot) into my portfolio.

    What about Neratel? The take over by ST engr already blow off by shareholder last friday, hopefully its price will dip below 0.40 coming monday…:) ..lol..

    Reply

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