Tuesday, September 28, 2010

Singapore's Dividend Aristocrats

The S&P Dividend Aristocrats is a list of stocks in the S&P 500 index that has increased dividends for at least 25 years. As you might guess, this is definitely a very tall order and as of 2010, if I remember correctly, only 10% or 50 stocks made it to the list. It is expected that the list will further dwindle to 40 stocks or so which prompted some to ask whether the criteria is too stringent.

Well, that is the way with our world, I guess, when we don't make the cut, we can always lower the bar ourselves. Haha!

Anyways, some of the names on this prestigious list are very well known, like 3M, Johnson and Johnson, Becton Dickinson, Coca Cola and P&G etc. Thet last four are also famous holdings of our hero.

Intrigued, I went to take a look at which Singapore stocks had a good track record of increasing dividend. Well as our history is not as long, I used a looser criteria of increasing dividend for at least 8 out of the past 10 years.

Here is the list of stocks.

Well, I guess you are as disappointed as I am. Only 8 stocks made the cut. Of which 3 pays a miserable 2% dividend. 2 are in property and construction, a treacherous sector. Another 2 of them belong to the same group entity. And 1 of them is not even a Singapore company.

There are 2 banks, but value investors are very wary of banks bcos there are just too many moving parts to get a good read on these financial beasts. Even Buffett had his fair share of trouble with Salomon Brothers 20 years ago and now Goldman Sachs, which is being criticized for screwing clients left right centre.

Raffles Medical, one of the 2% yield stock, might be interesting but its valuation is way too high at 26x. Might be worth doing some research now and wait for a good entry point.

The truly investable Dividend Aristocrat of Singapore might be SPH but it's main business is in a declining franchise and its high property value is based on frothy valuation in a flood infested shopping district.

In a nutshell, using the dividend arisocrat criteria cannot help us find good stocks in Singapore. We might have some luck elsewhere in Asia.