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Fishing for dividends

By Joce | Apr 1, 2020

I feel like I need to start this post with a proper disclaimer. What you read in this post are merely ideas I've been throwing around in my head and do not constitute advice in any form. I have no certainty that things will play out the way I hope/want/expect them to so please do your due diligence before making any investment decisions. 

Given the current prices, you could say that there is a bargain sale going on. However, we have no way of predicting which way the stock market will go in the next few months, when we'll enter the recovery phase, much less how long it will take for prices to recover to pre-Covid-19 prices.

Even so, I've been looking at blue chip stocks that have a good balance sheet and enough buffer that the chance of bankruptcy or insolvency is pretty low. Many of these stalwarts have seen sharp declines in stock price, but they also have upcoming dividend payments where they will be paying out dividends from FY 2019 - before the full effects of Covid-19 were felt on business operations.  

UOB's dividend payout is especially juicy as it includes a 20¢ special dividend, bringing up the total to 75¢, edging out OCBC and ST Engineering slightly in terms of % yield.

  Ex-date Payment date Dividend in ¢ Share price1 % Yield
DBS 7 Apr 2020 TBC 21 Apr 2020 TBC 33 18.15 1.8
OCBC 22 May 2020 (TBC) 5 Jun 2020 (TBC) 28 8.49 3.2
UOB 11 May 2020 21 May 2020 75 19.09 3.9
ST Engineering 27 Apr 2020 12 May 2020 10 3.05 3.2

1 At time of writing

Looking at the past week or so, it looks like share prices may be stabilizing. Not to say that further drops are out of the question. I don't think anyone can predict the future that well. If you are planning to add any of these blue chip stocks to your portfolio while prices are depressed, the dividend upside you get if you buy it before the ex-date makes it slightly more attractive in my opinion. Especially since prices are expected to languish at the bottom in Q2 anyway. 

Recently, DBS announced that their AGM scheduled for 31 March 2020 would be deferred in light of the social distancing measures Singapore has put in place. There is currently no confirmed date for the rescheduled AGM and as a result, the dividend payment will be delayed. DBS has an FAQ page about this here: https://www.dbs.com/investors/agm2020.page?pid=splitter-agm2020

According to UOB's website, their AGM is scheduled for 30 April 2020. I can't find any information on when OCBC's 2020 AGM is scheduled for but going by last year, it should be held around end-April as well. 

Authorities have put together some guidelines around AGMs that need to be held amid the Covid-19 situation. In light of this, I wonder if OCBC and UOB will be able to implement the necessary precautions in time to hold their AGMs, or will they also delay the AGM? If the AGMs are delayed, their dividend payout dates will also be delayed like DBS.

My plan is to buy UOB at the next dip for the dividend payout and sell at a marginal gain or breakeven without holding it for too long. I'll be listening for updates on their AGM before making my move.  

Updated on 8 Apr 2020
- Yield percentages
- Both OCBC (source) and ST Engineering (source, source) have deferred their AGM till further notice. Any changes to dividend ex-date and payment date will be communicated in future.

Tags: Portfolio