This morning DBS dangled a big carrot and I could not resist it and took the bait! So yes, after divesting DBS fully 2 years ago, I am a DBS shareholder again.
They increase the quarterly dividend again to 54 cents, that’s 12.5% higher than last quarter. Not only that, they also decided to give a one-for-10 bonus issue, with dividend per share maintained at $2.16 per share over enlarged share base!
Without even considering the bonus price, that’s already a dividend yield of 6.8% based on yesterday’s closing price of $31.65. So without doing much due diligence, this donkey here decided to take a small bite at the carrot when the market opened this morning.
That’s the amount I can afford from the cash I have in the portfolio. If I consider the bonus share, then my average price for this purchase will be about $29.3. And that will give me a cost yield of 7.3%!
What’s the catch?
While they are confident of sustaining dividend for the next financial year, it’s up to anyone guess how things will be like comes FY2025. Can they mitigate the likely drop NII with more fees income? So there’s definitely a need to monitor their business (OCBC and UOB too) a bit more closely in the coming year.
Also, the one-for-10 bonus share means I will end up with odd lots. However, I am not too concern about this since this investment is meant for income and I should be holding on to my shares for many years. The worst case scenario is to get my broker to help me sell it at a less favourable price.
I might, but now that I have bought a bit to ease the itch, I can sit on it for the moment. With my T-bills onIy maturing in March, I have one month to think about it. In the mean time, I will just enjoy this big ang pow from DBS and looking forward to more ang pows from OCBC and UOB after Lunar New Year.
Wishing all a Happy Lunar New Year and may all huat in the Dragon Year!
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