• A section of Singapore’s equity market is attracting renewed attention from investors as yields on government instruments trend downward. With 10-year bond yields now at 1.86%, for example, companies offering sustainable yields above, say, 4% present compelling alternatives for income-seeking investors.  • UOB Kay Hian, in a report yesterday, applied the following screening criteria : >4% yield, positive CAGR for dividend per share over 2022-2025F, and gearing of c.20% or less. The results (excluding non-banks and non-REITs) are shown in a table at the end of this article. • One stock that UOB KH's screening did not unearth is its very ownself (because it has a high gearing). But with a consistent payout ratio of ~50%, UOB KH has a trailing dividend yield of 4.4%, as the table below shows.
• In addition to dividends, UOB KH offers potential for capital gains via its exposure to higher trading commissions from a bull market and a pipeline of IPOs. In fact, year to date, the stock ($2.71) is up 61%. • Backed by the UOB Group, UOB KH is one of Asia’s largest brokerage firms. Headquartered in Singapore, it has a presence across Southeast Asia, Greater China, the UK and North America. • In 1HFY25, UOB KH's revenue rose 6.9% to S$339.1m, driven by 24.5% higher commission income mainly due to higher market volumes across regional and US markets. However, forex losses of S$16.4m reversed 1HFY24 forex gains of S$17.1 million, resulting in net profit of S$99.2m, down 13%. • OK, now read about UOB KH's take on dividend yield stocks .... |
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Excerpts from UOB KH report
Analyst: Adrian Loh
• Attractive yield differentials. With Singapore government bond yields trending lower, the yield differential between fixed income and equities has narrowed in 2025, thus reinforcing the relative appeal of companies offering high, sustainable dividend payouts.  Adrian Loh, analystEquity yields in the 4-6% range now offer a compelling pickup versus the 10-year Singapore Government Bond yield (1.8579% as at 4 Sep 25), while also providing potential for capital gains. In our view, this widening yield gap should support rotation flows into quality income equities as bond proxies. |
• Dividend sustainability is underpinned by cashflow visibility, balance sheet strength, and sector resilience. Companies with payout ratios below 70% and net cash or low-gearing positions can sustain yields even through economic volatility.
Unlike static bond coupons, dividends have the potential to grow in line with earnings, offering a quasi-inflation hedge.
As such, we advocate focusing on high-quality yield plays where valuations remain undemanding, delivering both income stability and upside optionality.
• Our screening methodology and resulting key stock picks. We have screened for non-banks and non-REITs with over 4% yield, a track record of increasing DPS over 2022-25F and gearing of around 20% or less which results in the top 10 most attractive stocks being: BRC, BAL, CSSC, CIVMEC, CD, DFI, GENS, VALUE, VMS and WKS (see table below).
 → Full UOB KH report here.→ See also: The 4 Undervalued Stocks AGT Partners Recently Scooped Up -- From Property To Vessel Operator |
