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Stocks that pay you to wait

What is better than earning a capital gain on an investment? Stocks that pay you to wait for that gain.

SINGTEL is one example of a stock that is currently paying a relatively handsome "waiting fee".


SINGTEL




If you had caught Singtel in early January, you are potentially holding a stock yielding 6.12% on your invested capital based on a $0.175 per share dividend payout.

If you hold the stock for a single dividend cycle, at current share price ($3.15), you would have made about 9% capital gains + 6% yield for a total return of over 15% .

Not bad at all.


KEPPEL CORP




A similar story may be observed with KepCorp.


If you had caught KepCorp in early January, you are potentially holding a stock yielding 4.3% on your invested capital based on a $0.25 per share dividend payout.

If you hold the stock for a single dividend cycle, at current share price ($6.6), you would have made about 13% capital gains + 4.3% yield for a total return of over 17.3%.

Singtel has pledged to maintain the current dividend payout until 2020, whereas Keppel Corp pays out a very sustainable 40-50% of earnings.  

If you are wrong, and the stock price languishes in the current range, then at least you are getting paid to hold the stock, while waiting for improvements to investor sentiment/earnings performance. 

If you are right, then you could potentially reap a double digit return, based on the capital gain and the dividends received.

The above are just examples of utilizing a growth + dividend strategy. Of course, not all companies are suitable for implementing such a strategy.  Ideally, one should shortlist companies with strong balance sheets, free cash flow, and which exhibit potential to grow earnings on a long term basis.

Vested in both companies. DYODD.

Onward to FI!

Comments

  1. Thanks for sharing your advice in this post. Much needed. I will keep these points in my mind during my next investment.

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