UOB Dividend

OCBC, DBS, UOB Dividend Review (2021): Which Blue-Chip Bank Gives The Highest Yield This Year?

Last year, we thought that UOB had outperformed the other two major banks due to its better dividend payout ratio and relatively less reliance on loans compared to the other two banks. Will it remain true this year?

In 2021, DBS announced a higher-than-expected increase in their annual dividend payout ratio, which improved their previous year’s dividend payout ratio. OCBC had a lower than expected increase, while UOB had an unchanged dividend payout ratio until 2021’s second quarter seeing a rise of 43% thanks to reopening economies. 

These results show increasing investor confidence for all blue-chip Singaporean banks. So, the question remains: should you invest in these financial products?

Read also How To Start Your Investment in Singapore.

Singapore Blue Chip Bank Performance FY 2020

To help you answer our question above, here’s a helpful table to know each blue-chip bank’s yield performance this year.

Blue Chip Bank Total Dividend Yield Per Share (2020 Figures) Last Traded Price (2 Aug 2021)  Dividend Yield (Using 2 Aug 2021 trading prices)
DBS S $0.87 per share S $30.36 2.87%
OCBC S $0.318 per share S $12.30 2.59%
UOB S $0.78 per share S $26.13 2.99%

 

UOB’s remarkable performance is notable from this table, with its solid S $0.78 per share from 2020 virtually carrying over the following year with a promising 2.99% dividend yield. While DBS has seen the highest dividend and latest trade price on 2 August 2021, the dividend yields fail to make it an excellent investment.

 

Singapore Blue Chip Bank: In-Depth Detail Review

Here are some more details about each blue-chip bank.

1. OCBC (SGX: 039)

One of the largest banks in Singapore, OCBC has a regional presence with subsidiaries in Malaysia, Hong Kong, and elsewhere. The bank’s current valuation is about S $54 billion.

OCBC provides services in banking, retail, and investment solutions to corporations and individuals. It provides a range of services, including merchant banking, wealth management, private banking, and commercial financing.

Dividend Per Share Price Pay Date Scrip Price (per share)
S $0.159 (2020 final dividend) 29 Jun 2021 S $11.93
S $0.159 (2020 interim dividend) 7 Oct 2020 S $7.81

 

OCBC’s dividend per share might be the lowest of all three banks, but a lower dividend yield guarantees a lower entry price in owning OCBC dividend stock. In 2020, many investors brought home S $300-S $350 in dividends per share because of its high trading value. We believe that OCBC can achieve this once again soon and highly recommend that investors hold the bank’s dividend stocks.

2. DBS (SGX:D05)

The Singaporean banking giant DBS (SGX: D05) is one of the most valuable banks in the region. It has a market capitalization of S $77 billion. It is an international bank that provides services for retail, commercial, corporate, and investment banking businesses across more than 50 countries worldwide.

Dividend Per Share Price Pay Date Scrip Price (per share)
S $0.18 (Final dividend for 2020)  24 May 2021 S $28.77
S $0.18 (Q3 2020 interim dividend)  29 Dec 2020 S $23.93
S $0.18 (Q2 2020 interim dividend)  5 Oct 2020 S $21.04
S $0.33 (Q1 2020 interim dividend)  26 May 2020 N/A

 

Those planning to invest in DBS are virtually in for great news because historical data suggests its 2020 performance increasing its dividends per share progressively. Its final dividend per share amount last 24 May 2021 in its final quarter is all we need to prove that DBS remains a worthwhile investment for long-term blue-chip bank Singaporean investors.

3. UOB (SGX: U11)

UOB has its headquarters in Singapore, and it also has regional offices across Asia Pacific, Europe, North America, Middle East, and Latin America. The company’s largest market in the United States has offices in California, New York, Chicago, Arizona, and Texas. UOB’s current market capitalization is at S $44 billion.

Dividend Per Share Price Pay Date Scrip Price (per share)
S $0.39 (2020 final dividend) 25 Jun 2021 S $26.31
S $0.39 (2020 interim dividend) 13 Oct 2020 S $19.52 

 

In 2020, UOB became one of the most viable blue-chip bank choices among all three banks in 2020 because of its high final dividend yield. The S $0.78 dividend per share paid out one of the biggest amounts in recent history. 

We still recommend holding on to your UOB dividend shares because it’s likely to still pay higher than other banks with its current trajectory and the 60% dividend cap removal as a directive from the Monetary Authority of Singapore.

 

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Our Verdict: UOB 

We believe that UOB is the best blue-chip bank among the three banks in Singapore. All three can offer astounding returns, but UOB’s impeccably consistent performance goes first, with DBS in second and OCBC in the last position.

What We Think the Future is for UOB

We lay the foundations of UOB’s progressive growth from its historic 2017-2020 data that strongly suggested its share prices and investor relations held exceptionally well. It increased from S $7.50 per share in 2017 to a high peak of S $30 per share in April 2018. Then, by 2019 and 2020, it handled a stable S $27 share price. With the economy slowly recovering, it’s only a matter of time until UOB grows back its wings. And unit account holders can remain optimistic.

Blue Chip Bank Dividend Investing FAQs

Let’s answer some frequently asked questions about blue-chip bank dividend stocks and investing.

1. What is a ‘Blue Chip’ Bank?

A blue-chip bank or company has good financial standing in the stock market, and investors often regard them as the safest and most reliable companies on the market. They often offer a variety of services, including savings, loans, mortgages, and more. Plus, blue-chip banks often offer high-interest rates, low fees, and access to large amounts of money.

2. Does a Blue Chip Bank Provide Guaranteed Returns?

Blue-chip banks offer a considerably high return on investment. However, they cannot guarantee high returns all the time. These banks have a low-risk profile and a probability of low returns.

Investors believe blue-chip stocks are the safest and most reliable investments out there. As an example outside Singapore, Goldman Sachs is a great example of a blue-chip company with an A+ credit rating from Standard & Poor’s whose stock once traded at a low $212 per share, which is significantly lower than its all-time high of $285 per share.

3. Will Blue Chip Bank Dividends Pay Out Higher Than Normal Banks and Companies?

This topic has been asked and debated for quite some time. Some experts say that blue-chip companies are more likely to pay higher dividends than normal banks and companies.

Some companies believe in the idea of dividends based on profitability, which suggests that, in general, blue-chip stocks would be more likely to pay their investors a higher dividend yield than normal banks and companies. One reason for this is that blue-chip banks usually have large amounts of cash reserves, making them less dependent on investment income as a source of revenue. 

4. Is There a Chance That Blue Chip Banks Can Fail?

Blue-chip companies are considered the most successful and valuable companies in the world. However, not all blue-chip companies are successful. Some of them have failed in the past and may fail in the future.

For example, Swiber Holdings had failed in less than 10 years. The blue-chip company’s failure shocked investors and customers alike, but these failures came from project delays and cancellations, and debts worth $26 million.

5. Are Blue Chip Bank Dividends Good For Short or Long-Term Investments?

Blue-chip companies offer high-quality dividends. The answer is a little more complex and involves the connection between risk and return. If you are thinking about investing in a blue-chip company, then be sure to look into the sustainability of its dividend payment in both short and long-term scenarios.

Companies and banks that have sustained growth for the last few years are the best options for your investment portfolio for long-term investments. However, blue-chip banks and companies with high volatility, which is rare, might work for short-term investors.

A Glossary of Terms

  • Scrip Dividend Scheme: The Scrip Dividend Scheme provides investors with an opportunity to receive new shares instead of cash in exchange for any dividends and property income distributions.
  • Interim Dividend: A company will often provide an interim dividend before the official release of its financial statements. Sometimes it results from positive changes to their overall performance, and other times it is a way for companies to communicate with stakeholders. The dividends that businesses typically payout are the smaller and larger of the two payments they make to their shareholders.
  • Dividends Per Share: DPS is the total amount of dividends a company assigns to ordinary shares each year.

To Sum It All Up

  • Singapore’s blue-chip banks are all worthwhile investments for long-term investors.
  • UOB is the best bank with excellent dividend yield rates for investors from 2021 onwards based on historical data
  • With Singapore’s economy recovering, UOB, DBS, and OCBC will likely increase their dividends, respectively.

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