One of the key themes to drive the
Thai stock market over the next several months will be resilient
fourth-quarter earnings performance and generous year-end dividend
payouts.
For the stocks on our coverage list
preparing to pay a final dividend over the next couple of months,
the average yield works out to 5.82%. Even if we adjust for the
10% dividends withholding tax, the net yield of 5.24% plus potential
capital gains look much more attractive than current six-month
bank deposit rates of 2.00-2.25%.
Using last year as a guide, most
companies’ shares should go XD from early March to late April
with payment date in May.
However, we caution investors that
share prices tend to adjust immediately on the XD date. For the
stocks listed below, share prices, on average, adjusted down 75%
of the dividend payment last year.
It is interesting to note, however,
that within a month after the XD date, most share prices had already
rebounded back to the pre-XD level. We believe this will be the
case again this year.
Investors should, therefore, hold
through the XD date for another month or two for share prices
to move up again to reflect the earnings growth potential for
this year. The key to this strategy is keeping stocks that have
very strong fundamentals and quality earnings.
We recommend investors to choose
dividend plays that are also on our BUY list. Our favourite short-term
dividend plays include Delta Electronics (DELTA), Saha Union (SUC),
Muramoto Electron (METCO), Thai Stanley (STANLY) and Wiik Hoeglund
(KWH). Of these, METCO has already announced a final dividend
of Bt8.5 with the stock going XD on January 31st.
