The above indicates that potentially 4.2% dividend can be obtained from investing in STI. Is this really true? The easiest way to invest in STI is through an ETF such as SPDRS STI ETF (ES3.SI). The below table shows the statistical dividend data for this ETF
| SPDRS STI ETF (ES3.SI) | ETF Dividend Yield Statistic (%) | ||||
| Year | Dividend Per Share ($) | Min | Max | Median | Average |
| 2008 | 0.12 | 3.7 | 7.9 | 4.5 | 4.9 |
| 2009 | 0.09 | 3.4 | 6.7 | 4.2 | 4.3 |
| 2010 | 0.06 | 2.0 | 2.4 | 2.2 | 2.2 |
| 2011 | 0.08 | 2.7 | 3.4 | 2.9 | 2.9 |
| 2012 | 0.095 | 3.2 | 3.8 | 3.5 | 3.5 |
| 2013 | 0.085 | 2.6 | 3.0 | 2.8 | 2.8 |
| 2014 | 0.088 | 2.7 | 3.1 | 2.8 | 2.8 |
| 2015 | 0.097 | 2.8 | 3.4 | 2.9 | 3.0 |
| 2008-2015 Statistical Average: | 2.9 | 4.2 | 3.2 | 3.3 | |
| Current Price = | 2.95 |
| Current Yield = | 3.3% |
| Fund Expense = | 0.30% |
| P/E = | 11.92 |
| P/B = | 1.18 |
From the above tables and chart. It seems that the current dividend yield of the STI is 3.3% instead of 4.2% as reported in the article? If we factor in the fund expense of 0.3%, the actual STI dividend yield is 3.6% only. So is this a reporting error or we are missing something?
The article suggest STI is relatively cheaper than its Asian peers. However from our historical data shown above, STI seems to be in the average range, not significantly undervalued from its own historical experience. Compare current yield of 3.3% versus statistical median/average of 3.2-3.3%. From this perspective, the STI is fairly valued.
From another perspective, when compared to the 10 year Singapore Government Securities (SGS) yield of ~2.6%, STI yield is higher and will be inflation protected as seen in the general growing dividend paid out each year while the bond coupon payout is fixed. So bond yield is not inflation protected. We can view STI ETF as a perpetuity bond with an inflation protection feature and higher volatility in terms of market price. If we are holding for a long period, volatility may not be a big issue as long as we can handle it psychologically when there is a market downturn (A good reference point will be the 2008 financial crisis).
We will explore more on the topic of investor mindset in future.
So, will you be attracted to invest in STI after our short analysis? Share with us your views. Appreciate any comments.
The Valumetrics Team
Valumetrics.co 
[…] if need to invest, we would rather buy STI than S&P 500 from perspective of valuation. In our previous post, we highlighted that buying a STI ETF, you can enjoy a dividend yield of 3.3% which is much higher […]
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