Dividend stripping helps S-Reits outperform market: UOB-KH

Singapore

Buy real estate investment trusts (Reits) before the dividends - normally referred to as distributions - are paid and hold them for a while after the payout, brokerage UOB Kay Hian recommended on Wednesday.

"Contrary to the efficient market hypothesis, empirical evidence shows that the dividend-stripping strategy has enabled Singapore Reits to outperform the market 62 per cent of the observed times, yielding excess returns of 1.4 per cent," analysts Vikrant Pandey and Derek Chang said.

The excess returns here are total returns measured relative to the Straits Times Index (STI), including dividends.

Dividend-stripping refers to a strategy of capturing the di…