The current 4.5 per cent yield levels are"attractive relative to history", and represent a"substantial" four percentage point spread over the 10-year government bond yield, they added.
"MSCI Singapore dividend payout ratios have steadily grown over the past decade with the inclusion of more dividend stocks, which we believe offer relatively defensible dividends," the analysts said. "Contributing nearly half of the MSCI Singapore Index's total returns in 2005-2019, we see dividends being an especially crucial component of index performance in the current low interest rate and low return environment."
Index growth would likely be driven by an inflection in the corporate earnings outlook as the negative impacts of the Covid-19 pandemic are contained and economic activity moves towards"near-normal levels" next year, they added. Both analysts favour the banking, property and consumer staples sectors, which"historically outperformed 6-12 months into past recessions". They highlighted five stocks in these sectors with"high and sustainable" dividends that were likely to benefit from incremental inflows - UOB, City Developments, Ascendas Reit, Wilmar, and NetLink NBN Trust.For daily updates on weekdays and specially selected content for the weekend.
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