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OCBC ups dividend by 5%! $7 billion net profit!

Wednesday, February 28, 2024

OCBC has declared a dividend of 42 cents per share, up from 40c a year ago.

This represents a 5% increase which makes me happy.

Full year dividend per share is, therefore, 84c.

This is an increase of some 21% from a year ago.

Payout ratio is about 53% of net profit.

The stellar results of 2023 was driven mainly by higher net interest margins across all its markets.

Net profit was in excess of $7 billion, up 27% from a year ago.

I like that OCBC has continued to drive costs lower with a lower cost to income ratio of 38.7%.




For people who are worried about OCBC's exposure to China, I have said before that they anticipated the problems early on like DBS and limited their exposure to the troubled property sector.

Their NPL ratio is at a very manageable 1.0%.

OCBC, like DBS and UOB, is well capitalized and well managed.

Even as net interest margins come under pressure, OCBC is expected to perform relatively well and should continue to pay attractive dividends.

This is especially when the current 53% payout is pretty undemanding.

In terms of valuation, OCBC is similar to UOB in that it trades at 1.1x book value, has a PE ratio of around 8x but it has a more attractive dividend yield of some 6.2%.




The last time I bought more of OCBC's common stock was in the middle of last year at between $12 to $12.30 a share.

In a recent YouTube video I produced, I said that immediate support has moved higher to $12.60 a share.

This has likely moved higher again to $12.90 a share which is where we find the rising 50 days moving average.

As OCBC is already my largest investment, I am in no hurry to add to my position.

If I have yet to initiate a position, I would buy some on a possible pullback in stock price to under $13 a share.

Just to get a foot in the door and not throwing in everything including the kitchen sink.

If AK can do it, so can you!


Investing for income more difficult as CPF SA goes away?

Monday, February 26, 2024

Recently, I blogged about how the CPF SA would vanish once we turn 55 from 2025.

This was, of course, announced during Budget 2024.

Many people have thought of using the CPF SA as one of the ways to generate passive income in retirement.

That is now out the window.

We would be left with the CPF RA which we can choose to top up to the ERS which is going to be 4x the BRS instead of 3x the BRS.

We would still have the OA but that attracts only 2.5% p.a. and not 4.0% p.a.

That 1.5% p.a. difference is a big deal for some people.

Imagine a $200,000 sum would see a difference of $3,000 which could cover a month's worth of expenses for some retirees.



So, how are we going to make up for the shortfall?

For as long as I have been blogging and longer than that, if I were to consider my pre-blogging days, I have said that CPF is a cornerstone in our retirement funding strategy.

However, it should not be the be all and the end all.

We should learn to invest for income in addition to having the CPF as a cornerstone.

Of course, when I say "we", I am referring those of us who are not born with a spoon made of some precious metal in our mouth.

Ahem.

CPF should be the ultimate safety net for most of us in case all else should fail.

I have shared my journey as an investor in all these years of blogging and many have asked me to conduct courses.

Of course, being lazy, I have refused again and again.

However, regular readers know that there is one course I have been promoting year after year.

Yes, Dividend Machines.



Dividend Machines is a course on investing for income and it is conducted yearly by The Fifth Person.

Being the first blogger to promote Dividend Machines so many years ago, I am happy to promote the course again this year.

Learn to invest for income and be less reliant on the CPF to fund our retirement.

Learn to build our own Dividend Machines.

Learn more about Dividend Machines using this link:

DIVIDEND MACHINES 2024.

Value for money.

Or else AK would not promote it.

Dividend Machines will help beginners and seasoned investors alike.

Roar to financial freedom in the Year of the Dragon!

If AK can do it, so can you.


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