Aug 12, 2020

Cory Diary : Lowering Yield Continues

Fixed Deposits and SSB Returns

Rate continues to drop. Holding the 10 year SSB now has effective rate of 0.88%. What this mean is for every $1,000 invested, $8.88 per year of interests (On Average) provided I hold till end of 10 years. Probably a price of a Taxi trip ? That's how bad it is now.

A check on DBS bank Fixed Deposits the rate is 1.3% for 18 months which seems much better. So the older SSB offer of more than 2%, I may want to hold them tightly. It has become a "gem" within SSB universe.


Using some calculation with YTM, I compute the dividend is in range of 2.7% currently after cost with potential for slightly more due to contract clause. Assuming this Bond is as good in reliability as many safe bonds, this is rather good returns at current market price.

N6M / QL2 - iShares J.P. Morgan USD Asia Credit Bond Index ETF. This ETF is regional and has return currently at roughly 3% based on latest dividend which is marginally higher than Astrea above. The risk is the dividend has been coming down for past many quarters. ( see below) I am still learning on this and will keep monitoring.

STI ETF - Year 2020 Yield 4.5%.

This is traded in SGX like shares. Dividends are distributed twice a year.   Prior to the Dividend cap by MAS, Banks have about 35.6% weight-age of STI. Singtel about 7.8% but expect them to reduce their dividend. Reits about 15.1% if i totaled correctly. And expects to reduce too due to Covid. Therefore Year 2021 may dip to possible 2.7% yield range however this could be further reduce with increasing capital gain.  Please DYODD. 

Cory View

Line them up against the yield/growth of bank (60% div cap) and Reits ( Quality ones ) ..... and then few quarters of relatively large Covid impact periods. What should be the acceptable stock price of local banks and local Reits be valued with Growth in perspectives and when the beast unleashed ?


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