This time last year, I blogged about the performance of the "Dogs of the Dow" and its sister "Puppies of the Dow" investment strategies as applied to the Straits Times Index (STI). I also identified the Dogs and Puppies of STI for 2014 as follows (you may wish to refer to The Dogs and Puppies of STI for more info).
Puppies of STI 2014
- CapitaMall Trust
- HPH Trust
- SingTel
- SPH
- ST Engineering
- Jardine Cycle & Carriage
- OCBC
- SGX
- SIA Engineering
- Starhub
So how have these Dogs and Puppies of STI performed in 2014? The results are shown below.
| Price 31/12/13 | Price 31/12/14 | Div (cents) | Div Yield |
Return (excl. Div) |
Return (incl. Div) |
|
| Puppies | ||||||
| CapitaMall | $1.90 | $2.04 | 10.70 | 5.6% | 7.4% | 13.0% |
| HPH Trust US$ | $0.68 | $0.69 | 5.25 | 7.7% | 1.5% | 9.2% |
| SingTel | $3.66 | $3.90 | 16.80 | 4.6% | 6.6% | 11.1% |
| SPH | $4.12 | $4.21 | 21.00 | 5.1% | 2.2% | 7.3% |
| ST Engg | $3.96 | $3.40 | 16.00 | 4.0% | -14.1% | -10.1% |
| Non-Puppies | ||||||
| Jardine C&C | $35.95 | $42.60 | 108.00 | 3.0% | 18.5% | 21.5% |
| OCBC | $9.90 | $10.46 | 31.11 | 3.1% | 5.7% | 8.8% |
| SGX | $7.26 | $7.81 | 28.00 | 3.9% | 7.6% | 11.4% |
| SIA Engg | $5.06 | $4.22 | 24.00 | 4.7% | -16.6% | -11.9% |
| StarHub | $4.29 | $4.15 | 20.00 | 4.7% | -3.3% | 1.4% |
| Dogs | 4.6% | 1.5% | 6.2% | |||
| Puppies | 5.4% | 0.7% | 6.1% | |||
| STI | 3167.43 | 3365.15 | 88.00 | 2.8% | 6.2% | 9.0% |
As shown above, both the Dogs and Puppies have underperformed the STI for 2014, returning 6.2% and 6.1% respectively against STI's 9.0%. If we do not consider dividends, the results are even worse, with the Dogs and Puppies returning only 1.5% and 0.7% respectively against STI's 6.2%. The results are dragged down by the performance of ST Engg and SIA Engg, which returned a negative -10.1% and -11.9% respectively. So, for 2014, it is STI that beats both the Dogs and Puppies.
For 2015, which stocks will be the Dogs and Puppies of STI? The dividend yield and share price as at 31 Dec 2014 of the 30 STI component stocks are listed below, in descending order of the dividend yield.
| Counter | Div (cents) | Price 31/12/14 |
Div Yield |
Remarks |
| HPH Trust US$ | 5.25 | $0.69 | 7.61% | Puppy |
| A-Reit | 14.39 | $2.38 | 6.05% | Puppy |
| SIA Engg | 24.00 | $4.22 | 5.69% | Dog |
| CapitaMall | 10.70 | $2.04 | 5.25% | Puppy |
| SPH | 21.00 | $4.21 | 4.99% | Dog |
| SembCorp | 22.00 | $4.45 | 4.94% | Dog |
| StarHub | 20.00 | $4.15 | 4.82% | Dog |
| Kep Corp | 42.00 | $8.85 | 4.75% | Dog |
| ST Engg | 16.00 | $3.40 | 4.71% | Puppy |
| SingTel | 16.80 | $3.90 | 4.31% | Puppy |
| Noble Grp | 4.91 | $1.14 | 4.31% | Substitute (P) |
| SembMar | 13.00 | $3.26 | 3.99% | Substitute (P) |
| Olam | 7.50 | $2.02 | 3.71% | Substitute (P) |
| SGX | 28.00 | $7.81 | 3.59% | |
| SIA | 41.00 | $11.60 | 3.53% | |
| UOB | 75.00 | $24.53 | 3.06% | |
| ComfortDelGro | 7.75 | $2.60 | 2.98% | |
| OCBC Bk | 31.11 | $10.46 | 2.97% | |
| DBS | 58.00 | $20.60 | 2.82% | |
| HKLand US$ | 18.00 | $6.76 | 2.66% | |
| ThaiBev | 1.80 | $0.69 | 2.61% | |
| Jardine C&C | 108.00 | $42.60 | 2.54% | |
| Capitaland | 8.00 | $3.31 | 2.42% | |
| Wilmar | 7.50 | $3.24 | 2.31% | |
| JMH US$ | 141.00 | $60.95 | 2.31% | |
| GoldenAgri | 0.92 | $0.46 | 2.01% | |
| GLP | 4.50 | $2.48 | 1.81% | |
| CityDev | 12.00 | $10.27 | 1.17% | |
| Genting SP | 1.00 | $1.08 | 0.93% | |
| JSH US$ | 26.00 | $34.20 | 0.76% |
Just to recap, the Dogs of STI are the 10 highest-yielding dividend stocks in the STI, while the Puppies of STI are the 5 lowest-priced stocks among the Dogs of STI. Thus, the Dogs and Puppies of STI for 2015 are as follows:
Puppies of STI 2015
- A-Reit
- CapitaMall Trust
- HPH Trust
- SingTel
- ST Engineering
- Keppel Corp
- SembCorp
- SIA Engineering
- SPH
- Starhub
If you notice, among the Puppies are all the 3 Real Estate Investment Trusts (REITs) in the STI. This is to be expected, since by their very nature, REITs are high dividend-yielding stocks. Coupled with the fact that REITs are lower-priced compared to the STI component stocks, they would naturally dominate the Puppies of STI. The Dow Jones Industrial Average (DJIA) does not contain any REITs, so REITs do not form any of the Dogs and Puppies of the Dow. If you believe that REITs should not form part of the Dogs and Puppies of STI, their replacements would be the next 3 highest-yielding stocks, namely, Noble, SembMar and Olam, which are also lower-priced than the 5 newly identified Dogs.
As a matter of interest, assuming we remove the REITs of the 2014 edition of Dogs and Puppies of STI, would they have performed better than the original Dogs and Puppies of STI? The results are shown below.
| Price 31/12/13 | Price 31/12/14 | Div (cents) | Div Yield |
Return (excl. Div) |
Return (incl. Div) |
|
| Puppies | ||||||
| SIA Engg | $5.06 | $4.22 | 24.00 | 4.7% | -16.6% | -11.9% |
| SingTel | $3.66 | $3.90 | 16.80 | 4.6% | 6.6% | 11.1% |
| SPH | $4.12 | $4.21 | 21.00 | 5.1% | 2.2% | 7.3% |
| ST Engg | $3.96 | $3.40 | 16.00 | 4.0% | -14.1% | -10.1% |
| StarHub | $4.29 | $4.15 | 20.00 | 4.7% | -3.3% | 1.4% |
| Non-Puppies | ||||||
| Jardine C&C | $35.95 | $42.60 | 108.00 | 3.0% | 18.5% | 21.5% |
| Kep Corp | $11.19 | $8.85 | 42.00 | 3.8% | -20.9% | -17.2% |
| OCBC Bk | $9.90 | $10.46 | 31.11 | 3.1% | 5.7% | 8.8% |
| SGX | $7.26 | $7.81 | 28.00 | 3.9% | 7.6% | 11.4% |
| UOB | $21.24 | $24.53 | 75.00 | 3.5% | 15.5% | 19.0% |
| Dogs | 4.0% | 0.1% | 4.1% | |||
| Puppies | 4.6% | -5.1% | -0.4% | |||
| STI | 3167.43 | 3365.15 | 88.00 | 2.8% | 6.2% | 9.0% |
There are 2 REITs in the 2014 edition, namely, CapitaMall and HPH Trust. They are replaced by Keppel Corp and UOB. Since they are also Puppies, their puppy status went to SIA Engg and Starhub. The results show that the non-REIT Dogs and Puppies performed worse that the original Dogs and Puppies. This is due to the inclusion of Keppel Corp as a Dog and SIA Engg as a Puppy, which returned -17.2% and -11.9% respectively, compared to CapitaMall's 13.0% and HPH Trust's 9.2%. Nevertheless, it might be premature to conclude whether REITs should form part of Dogs and Puppies of STI based on only 1 year's results. Readers will have to make their own assessment on this.
So, for 2015, will Dogs (and Puppies) be Man's best friends? We shall see this year :)
See related blog posts:
Though dividends are an important part of investing in a stock for the long-term investor, I think that there are other ways to get a better idea of the value of the share other than through dividend yields, like the risk of the dividend dropping as the company is unable to maintain such a high dividend.
ReplyDeleteA way of deciding on the value of the share and comparing it to the share price such as the dividend discount model might be more appropriate than relying solely on dividend yields, more info on dividend discount model here: http://someideasoninvestinginsingapore.blogspot.com/2015/06/intrinsic-value-dividend-discount-model.html