Singapore’s leading banks DBS Group (SGX: D05), OCBC Ltd (SGX: O39), and United Overseas Bank Ltd (SGX: U11) have delivered another year of record earnings and increased dividends.
But with share prices soaring, are valuation risks too high? Is it still a good time to invest?
Click here or the image below to read my latest article on The Smart Investor where I weigh the potential rewards against the inherent risks.
Read on if you would like to know if I have added to my position.
Did I add to my position?
In short, I am pleased with the performance of all three banks.
If you have read the above article, you will realise that DBS continues to deliver the strongest performance. It is also the bank that provides the clearest guidance on how it will return the capital to shareholders.
It is no wonder then that DBS received the most attention from investors, with its share price appreciated the most over the past year.
That said, I was still in two minds when considering whether to add to my DBS or UOB positions.
While DBS has performed better in recent years, I have perceived it to be more aggressive in pursuing growth than UOB. Hence, I am wary that if and when a downturn occurs, the impact on DBS might be larger.
I also like UOB’s approach to pursuing long-term growth with stability, which I believe will lead to a more sustainable growth in dividends.
Moreover, the completed integration of Citigroup portfolio in Thailand, Malaysia and Indonesia (Vietnam by this year) might further boost its earnings this year.
While I weighed the pros and cons of DBS and UOB, I realised I was overlooking other opportunities.
I took a step back and asked myself, “How about other income stocks in my portfolio?”
HRnetGroup Ltd (SGX: CHZ) and Frasers Centrepoint Trust (SGX: J69U) stood out with their current outlook and a similar yield of about 6%.
Given that I have smaller holdings, I immediately made up my mind to invest in them this time.
Hence, I did not add to my holdings in either DBS or UOB.
Oh, for those of you who are wondering why I did not consider OCBC, it is already my largest position in my portfolio, so I reckon I have sufficient exposure to it.
Click here if you have not read my article on The Smart Investor.
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