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High Yield Dividend Stocks are Not Cheap, Maybe More Pain Ahead, Maybe Not

(Click to see my Dividend Stock Tracker)

Most readers would know that I maintain a list of very popular high yield dividend stocks in Singapore.

You can see the dividend yield, and how the dividend yield fluctuates as price changes. You can see its EV/EBITDA and its net debt to asset, to assess how leveraged they are.

For some time, I kept getting the high yield are not cheap argument.

Perhaps it depends on the context of what other stocks they are comparing to. Or the time period they are compared to.

Interest rate is rising, so what is an average yield in the past, say a 5-5.5% dividend yield for Singapore based office properties, 6.5-7.5% dividend yield for industrial properties are not considered fair value.

However, high yield dividend stocks, if they do not have a business behind it, tends to be interest rate sensitive.

They are definitely not too expensive.

The reason why dividend stock fall is because:

  1. of reasons affecting the whole market that has not got to do with them
  2. of reasons affecting their sector. Definitely got to do with them
  3. of reasons affecting themselves only

WE have something of #1, #2 and #3 affecting them.

Many have a 14-20% draw down from peak prices.

Some key notes:

  1. Suntec peak $2.25 now $1.69, which is 17 Jan 2017 price. This is a 25% draw down from top at $2.25
  2. Capitaland Commercial Trust peak $2.05 now $1.63. which is 10 Oct 2017 price. This is a 20% draw down
  3. Parkway Life REIT peak $3.03 now $2.58, which is 16 May 2017 price. A 14.8% draw down
  4. Mapletree Logistics peak $1.38 now $1.21, which is Apr 2018 price. A 12% draw down
  5. CDL Hospitality trust peak $1.82 now $1.60, which is Sep 2017 price. A 12% draw down
  6. Starhill Global‘s peak was at $0.89 at Jul 2015. Current price is $0.65. A 27% draw down
  7. Starhub‘s peak was closer to $4.70 in 28 Apr 2013 and its been on a down trend. Current price is at $1.67. A 64% draw down
  8. M1‘s peak was closer to was closer to $4.00 in Feb 2015 and its been on a down trend. Current price is at $1.55. A 61% draw down.
  9. Hutchison Port Holdings HPH, the USD one, IPO at US$1.01 in 2011 and its been on a down trend for 7 years. Current price is at US$0.29. A 71% draw down.
  10. Ascendas REIT peak $2.70 now $2.58, which is Feb 2018 prices. A 4.4% draw down

If you have a pre-conceived notion that dividend stocks are safer, less volatile, that dividend makes up for it, chances are they are not as safe as bonds, less volatile as you imagined.

You can lose your pants off as a retiree if you are looking at high yield dividend stocks, as high yield bonds that default.

Dividend will make up for it, if the business and fundamentals are intact.

When prices are down, it does present an opportunity. It means things are not as expensive as last time.

However, that does not mean that they are attractively valued either.

If there is one thing working in these stocks favor, in terms of appeal, is that the narrative of rising interest rates, poor demand and supply, business fundamentals and falling stock prices, have created a negative narrative.

Its always better to look at times like this then when things are always bullish.

You know that more or less, a lot of these companies have their pants down already. More are showing weakness than strength.

A lot people have good returns from these stocks that have large draw downs.

A lot of people get caught and lost money in the same stocks as well.

What is the difference here? Share with me your experience.

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.




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Saturday 23rd of June 2018

Hi, what are your thoughts on buying REITs now since the prices dropped? Do you think the prices will increase in the future?


Sunday 24th of June 2018

Hi Grace, you are asking me to make forecasting and usually this is a problem. I forecast 2017 was going to be a poor year and if you have listen to me, you would have gotten out of a 20-30% REIT bull haha!


Saturday 23rd of June 2018

Hi, I'm new to your blog. It is an excellent sharing. May we know how you tabulate these different companies updated dividend and other data in your list? All these base on last 12 months or base on FY17 data?


Saturday 23rd of June 2018

Hi Wil, i try to tally the financials using annual data. The balance sheet data is done every quarterly. The prices changes daily at the end of the day.


Wednesday 20th of June 2018

Hi, I think Starhub is a classic of reason #2 and #3 you mentioned on their TV offering which was their hook to get customers. It looks like they did not want to see the streaming wave coming (Netflix, Amazon and others) and they did not take any step to re-invent themselves on the TV. The Starhub TV today is identical to the Starhub TV 10 years ago. At that time it was a quasi monopoly. When looking at it now, it became old fashioned, expensive and not open to new technologies (no embedment in smartTV, no off-line mode etc.).

A year ago, in the Meeting/Conf Call with the Press to announce their financial results for FY2016 I asked them the following question: "What are you doing new that is outside your comfort zone to re-invent your business model". The answer from the Head of Marketing was "we will propose new offering for kids and teenagers on the mobile". I am over-simplifying their answer but that was my take. The day after I sold my Starhub stocks. Starhub was very relevant 10 years ago. I feel they did not change at all while the world is fast-forwarding. To my appreciation and unless they change and move to booming sectors (e-Commerce, B2B, Big Data...), they became irrelevant and the dive of the stock price is not surprising. I am sure there is hope though because they have a very large customer base in Singapore.


Thursday 21st of June 2018

Hi Regis, Starhub and M1 was always focus on being lean so as to compete. They also paid a good dividend. They tried to grow an enterprise segment but its difficult locally versus established players such as Singtel's NCS and ST engineering.

They can try but if Singtel is having such a hard time growing, they will have difficulty. all this means is that they will reduce their cash flow until they merge with one another.

Yan ZiYang

Wednesday 20th of June 2018

M1 current price is S$1.54, not S$2.59


Wednesday 20th of June 2018

Hi ziyang, I realize my mistake. I must have moved my chart in a bad manner!

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