SINGTEL STOCK: DIVIDEND CUT?

Dear readers, DBS Equity Research has recently commented that Singtel may cut its dividend rate starting April 2020. When I read of the above news, I was rather neutral since I had not invested in Singtel stock before unlike a number of investors who may have liked Singtel stock based on the perception that it is a defensive Singapore stock with a decent dividend yield.

I would think that unless investors vested in Singtel stock have kept up with Singtel stock development in recent years, the impression of defensive dividend play might have been rooted in the earlier trading days of Singtel stock where the business environment is unlike the competitive and more dynamic landscape today. Against a more competitive business backdrop, the cut in dividend yield is not surprising to me.

As I have always highlighted, the best run-up of prices of the Straits Times Index stocks might be in the yester-years of fast industrialisation growth of Singapore. Fast forward to today, it is not a given that the Straits Times Index stocks will continue to be the blue-chips that investors know of.

And that is why, instead of the Straits Times Index stocks, it would be wiser for investors to be invested in the Straits Times Index ETF which tracks the Singapore stocks index, without the concerns of the business risks faced by the individual Straits Times Index stocks.

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