As said a few times, the current cycle of interest rate hikes have made dividend stocks attractively priced at a high yield. This is because of the need to be valued at higher than the risk free rate of the countries they operate in.
Hence, even REITs with strong balance sheet have to be priced at a higher dividend yield than before.
When the time comes for interest rate cuts, it is natural for their yields to fall but share prices to increase. Below are 5 dividend companies which seems to maintain a good payout ratio, is sustainable and are of a high yield:
1) UnitedHampshire US REIT (Listed in Singapore)
A US REIT which operates Striple malls in the East Area of USA, with the low supply of stripe malls in USA, Utd Hampshire REIT will continue to have a high occupancy rate. The REIT has been experiencing increasing rental growth annually. The downside is that its cost of debt has increased due to US fed rate hikes. The reverse will happen once fed rates are lowered.
The REIT currently sports a 9.5% dividend yield (projected last year's was 10.1%). Its leverage ratio is below 40% with the recent sale of a retail mall at above book valuation.
At NAV of 72 US cents vs share price of 43 US cents, it is attractively priced.
2) LINK REIT (Listed in Hong Kong)
The REIT manages malls in Singapore, China, Hong Kong and office spaces in China, Hong Kong. In Singapore, Jurong Point and AMK hub is owned by it and it is the sixth largest landlord in Singapore. Being listed in Hong Kong where risk free rate is 5.25%, the REIT is valued at 7.5%, the premieum shows it is a blue chip REIT similar to how capitaland is valued in Singapore (+2% premieum).
LINK REIT has a low leverage ratio of below 30%, dividend of 7.5% and is in the Hang Seng Index list cementing its place as a blue chip. Strong buy, just that us investors need to use a foreign custodian account or purchase through webull/tiger/moomoo to own this attractive REIT.
3) Pacific Century Developments (Listed in Singapore, PCRD)
A large shareholder of HK largest teleco, PCCW/HKT, part owner of FWD insurance and Viu (OTT). PCRD generates dividends from the dividends decalred by its asosciate companies. In 2024, iPCCW/HKT generated a bumper dividend and PCRD then shared the earnings as dividend to shareholders. PCRD is a holding company which just holds investments with no main business on its own, similar to Taiwan's Hotung Holding. It sports a 13-14% dividend yield for now.
How much PCRD distributes as dividend annually depends on the performance of PCCW in HK and Viu. The current strucutre of PCRD is that it is largely held by Pacific Century Group with Richard Li at the helm. PCRD is structured to be milked as a cash cow providing the cash to its parent, Pacific Century, to finance its operations.
Hence as long as the structure remains, it will definitely be a top dividend stock for shareholders.
4) ICBC Bank (Listed in Hong Kong)
The largest bank in China and world, ICBC is a household name. Surprisngly due to the negativity to China companies, it has one of the lowest price earnings ratio as compared to its overseas banking rivals. Naturally with a low earning ratio but respectable dividend payout, the result is that this Chinese bank gives investors a 7% dividend yield.
In terms of risk, it is unlikely the bank will collapse despite concerns of non performing loans in China. Similar to LINK REIT, the bank is in the Hang Seng Index (blue chip status), , just that us investors need to use a foreign custodian account or purchase through webull/tiger/moomoo to own this attractive REIT.
5) Asian Pay TV Trust (Listed in Singapore, APTT)
APTT is in the TV/Broadband business in North/Central Taiwan. Its annual dividend is 1.05 cents.
Dividend forms only 30% of its free cashflow with the remaining used to pay down its debts. The trust is highly geared but i believe it will not affect its dividend. I foresee a continous issuance of 1.05 cents dividend. Its TV business is declining but the remaining cashflow generated from its broadband business is able to support current dividend.
What investors are currently worried about is the trust's ability to refinance its SGD$1.1 billion debt that is due end 2025. If debt refinancing is successful and it is to extend for another 7 years (its usual cycle), APTT will be a very attractive 13% yielder and post news of the refinacing, will see an upward revaluation.
Even among the dividend stocks, it is of a high risk high reward profile.
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