The recent decline in the equity market has allowed value to emerge for investors. DBS Research (DBS) came out with 6 stocks for a balanced investor that offer high-dividend payouts, potential catalyst or both.
A balanced investor will be seeking for an equal opportunity in capital growth and dividend income. In anticipation of capital growth, they will have a higher tolerance for price fluctuations and has an investment horizon of 12 months.
Since some of the stocks have been featured in previous articles for dividend investors and for conservative investors, we will not repeat them. For this article, we have picked out ARA Asset Management (ARA), Mapletree Commercial Trust (MCT) and SIA Engineering (SIE).
1. ARA Asset Management
Backed by Asia’s “superman”, Li Ka Shing, ARA has over 1,100 employees across 15 cities and manages more than $29 billion in assets. ARA manages REITs and private funds while providing real estate management and corporate finance advisory services. With $150 million to spend, ARA is well positioned to gain from the strong headwinds faced by Asia’s property market.
Stable dividend from ARA is a good reason for investors to buy into the company. ARA has given a stable dividend of $0.048 per share for the past three years despite having a stock distribution and a right issue. It is trading at a yield of 4.57 percent based on the price of $1.05.
Analysts from DBS are extremely bullish with ARA and gave it a potential upside of 48.9 percent.
2. Mapletree Commercial Trust
MCT is REIT that owns commercial properties that consist of a mixture of retail and office space in the south of Singapore. It owns four properties; namely VivoCity, Bank of America Merrill Lynch HarbourFront, PSA Building and Mapletree Anson. MCT offers one of the strongest distribution per unit (DPU) growth among its peers.
Dividend growth is strong for MCT for the past three years, growing from $0.06 per share in 2013 to $0.08 per share in 2015. This translates to a 23.3 percent growth in dividend for three years. Based on the trading price of $1.405, MCT is trading at a yield of 5.69 percent
3. SIA Engineering
SIA Engineering (SIAEC) is an aircraft engineering company that provides aircraft maintenance services in Singapore. Though its name and parent company, it provides services to a wide range of customers. It is well positioned to grow with Singapore’s increasing prominence as a transportation hub and increasing air traffic in and out of Singapore.
Despite the falling dividend yield, SIAEC is still trading at a yield of 4.35 percent based on the trading price of $3.45. Its cheap valuation and potential for growth gave it great value to investors. Analysts from DBS gave it a “Buy” call with a potential upside of 11.3 percent.