The start of the year brings fresh aspiration, perspectives and ideas. This year, we start early with the dividend list using Poems' screener. It is quite basic but allows us to screen using ROE, ROA, Dividend along with the usual market cap and valuation cut-offs. So we tried the following:
- Market cap > SGD 500m
- ROE > 10%
- ROA > 4%
- Dividend Yield > 3%
- PE < 25x
As we know, the Singapore Government 6 month Treasury Bills currently gives us 3.7%. So to be buying for dividends, we would actually require a much higher yield (perhaps 5% or more), otherwise we should just buy T-bills right? However, with high yielding stocks, if they are not generating high enough returns (which is why ROE is important), they are basically paying out their equity base. One of the stocks we discussed actually exhibited this:
Overseas Education pays a 7-9% dividend over the past years, but as there was no growth...
