Dividend yielding stocks with low Price-to-book ratio

In her second book “Show me the money, The Science of stock-picking”, Teh Hooi Ling mentioned that buying stocks with the highest dividend yield, but lowest Price-to-Book (PTB) ratio appears to be a winning strategy over a longer period.

There can be stocks that are trading with low Price-to-Book (PTB) ratio and at the same time had a strong dividend yield percentage. These stocks I am tracking had good brand names. (Note: This list is not exhaustive.) 

Counter Share price ($) at 14 Aug PTB Dividend Yield (%) DY/PTB
Keppel Corp 7.35 1.23 6.53 5.29
SembCorp Ind 3.59 0.99 4.46 4.48
UOB * 20.58 1.08 4.13 3.83
OCBC 9.76 1.20 3.69 3.08
SembCorp Marine 2.63 1.80 4.56 2.53
DBS 19.26 1.23 3.12 2.53
SIA 10.10 0.93 2.16 2.31
SPH 4.14 1.87 3.62 1.93
Singtel 4.06 2.56 4.31 1.69
SATS 3.80 2.84 3.68 1.30
Singapore Post 1.91 2.72 3.40 1.25
M1 3.04 7.32 6.22 0.85
SGX * 7.57 9.19 3.70 0.40
StarHub 3.76 41.93 5.32 0.13
* Cum Dividend

Note: Data are extracted from StockFacts of SGX web site.

The last column “DY/PTB” is a calculated number after taking dividend yield (%) divided by Price-to-Book ratio (number of times). The table is sorted by this number from the highest to the lowest.

Commentary

Of interest were M1, SGX and StarHub had high Price-to-Book ratios. It was not unusual based on past data. These stocks had good dividend yields. DY/PTB for these stocks were below 1.00 because of big denominators.

Looking at top 7 counters, share prices of Keppel Corp, Sembcorp Industries and Sembcorp Marine were affected adversely by the collapse of oil prices. As a result, dividend yields were high. DY/PTB is high.

All the banks, UOB, OCBC and DBS, are in this top 7. The 7th is SIA.

Disclaimer: Caution is advised with regard to using the above information for investing.

Copyright © 2015, 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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