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Was feeling a little tired after a morning of activities.
Medical appointment followed by grocery shopping.
Lost some blood and still had to carry heavy bags.
After settling down at home, I read the news and I suddenly felt energized!
DBS increased their dividends to 48 cents a share per quarter!
Huat ah!
The decision to invest in DBS back in 2016 at $13 to $14 a share and continuing to accumulate over the years whenever Mr. Market felt depressed is paying off handsomely.
Annualizing 48 cents a share, annual dividend per share is $1.92 which means the dividend yield on my initial investment is in excess of 14% per annum!
Of course, with DBS being one of my largest investments, this is probably going to have an outsized impact on my passive income for the year.
I so stunned like vegetable!
What is even more impressive is that the higher dividend is probably sustainable.
DBS revealed that the expected catch up in funding cost has not been as bad as feared.
In fact, net interest margin saw a further increase of 12 basis points, quarter on quarter.
Net profit grew 48% year on year and 5% quarter on quarter!
I have said before that DBS is able to trade at a juicy premium to book value because of its very impressive return on equity or ROE when compared to UOB and OCBC.
DBS saw its ROE hit a new quarterly high of 19.2%, up from 13.4% in the same quarter last year!
DBS has a CET1 ratio of 14.1% which is in excess of what it feels is optimum.
So, we could possibly see higher dividends to come if DBS has no better use for the money.
DBS could, of course, simply hold on to the money for a rainy day.
Whatever the case might be, DBS is a rock solid investment for both income and growth.
Yes, just like what I said about investing in UOB, we can have our cake and eat it too.
OCBC should deliver good results tomorrow too.
I am feeling so giddy now, I need to go lie down for a bit.
If AK can do it, so can you!
Reference:
DBS fair value per share?
Transcript of my YouTube video @AK71SG.
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