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Are there still value opportunities in the search for yield?

Even the usual Straits Times Index stalwarts have become expensive

Published Sun, Jul 27, 2014 · 10:00 PM
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DIVIDENDS. Who, in this yield-starved world, doesn't like them? But after a 15 per cent rally in the past few months in real estate investment trusts (Reits), finding a cheap stable yield stock has become harder again.

Even the usual Straits Times Index (STI) stalwarts have become expensive. Take telco SingTel, one of the biggest and most widely-owned counters in Singapore. Its price to earnings ratio (PE) has risen to around 17 times now, above the 14 to 15 times earnings that large Singapore stocks have historically traded at. At around S$4 a share, it is now trading at a one-year high.

Bus and taxi operator ComfortDelGro is another standout performer, with a one-year return of 36 per cent. But with a PE ratio of 20 times, it cannot be considered cheap, unless the company can demonstrate a lot more earnings growth in the years to come. Now, someone buying the counter will have to contend with a dividend yield of just 2.7 per cent.

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