Equity – What price to transact?

Companies with 31 December year end had proposed final dividends to be paid out to shareholders. These proposed final dividends must be approved by shareholders at coming Annual General Meetings and paid out after approval. All these are happening in the months of April/May. Shares are currently traded with cum dividends for some stocks. When one buys share with cum dividend, he has the right to receive the dividend. If another sells share cum dividend, he loses the right to receive the dividend.

So proposed dividend (cum dividend) is an important factor in deciding on price to transact for a particular stock. See table below for proposed dividends for some companies.

Proposed dividend Price

19.3.13

52 wks high/ low
OCBC 17 cents $10.28 10.54/8.14
UOB 50 cents $19.89 20.23/16.91
DBS Bank 28 cents $15.50 15.75/12.91
Keppel Corp 54.4 cents * $11.57 11.93/9.57
Semb Marine 8 cents $4.51 5.40/4.10
SembCorp Ind 15 cents $5.22 5.79/4.63
Keppel Land 12 cents $3.88 4.32/2.75
UOL 15 cents $6.96 6.99/4.16
City Dev 13 cents $10.77 13.24/9.53
CapitaLand 7 cents $3.51 ** 4.03/2.40
Starhub 5 cents $4.13 ** 4.23/3.01
M1 8 cents $2.86 2.90/2.42
Comfort Delgro 3.5 cents $1.925 1.95/1.435

Note:
* Keppel Corp: 27 cents ordinary dividend and 27.4 cents dividend in specie (Keppel REIT units)
** Prices for CapitaLand, StarHub traded now are without cum dividend.

Another important consideration is to look at 52-week high and 52-week low price of stock to see where current share price compares with the year’s high and low share prices. See table above.

As a general observation (in this environment now where STI is trending upward), share prices are trading close to 52-week high. One may find some stocks are trading lower than the 52-week high and some stocks are pushing the upper limit of 52-week high. Some are off 52-week high by quite a bit because of worse than expected year-end profits.

Besides the above, there are many other factors in determining a good price to enter the market for a particular stock counter. One can study Price-earning ratio, Price-to-book ratio, Net asset value per share. See my earlier blog post.

Pricing a stock is not an exact science. It also involves shareholders’ sentiment, expectation of future earnings of companies, and macroeconomic environment of economies which companies are operating in, among others. So it is always not easy to hit it right with the right price.

Copyright © 2013, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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