Cash dividends beat bank savings as investors seek higher yields

Update: March, 28/2020 - 07:25


A residential block constructed by Becamex Infrastructure Development JSC in Bến Cát Town, Bình Dương Province. — Photo

HÀ NỘI — The recent cut to the central bank’s benchmark interest rate may drive investors towards cash-dividend stocks as they look for higher yields.

Under a decision issued by the State Bank of Vietnam (SBV) this month, saving interest rates for short-term loans of up to six months were cut by 0.25-0.30 percentage points to 0.5 per cent and 4.75 per cent per annum.

At large-cap banks such as Vietcombank, Military Bank, Bank for Investment and Development of Vietnam (BIDV), and Techcombank, saving interest rates for those terms range from 3.9 per cent to 6.0 per cent.

For some listed companies, investors may have higher yields if they buy in at low prices as the dividend-to-share price ratios beat banks’ saving rates.

Becamex Infrastructure Development JSC (HoSE: IJC) in 2019 earned a total of nearly VNĐ1.6 trillion (US$68.2 million) in revenue and VNĐ284.4 billion in profit, beating its full-year targets by 65 per cent and 23 per cent, respectively.

The figures were up 28 per cent and 22 per cent year on year. In 2017-18, the company paid a cash dividend of 10-12 per cent.

The dividend payout rate set for 2019 is expected to be a minimum of 12 per cent.

The company's shares slipped 2.7 per cent to end Thursday at VNĐ9,100 apiece. That closing price means the dividend payout could offer a yield rate of 13.1 per cent.

Đà Nẵng Housing Investment Development JSC (HNX: NDN) is a different case. The company reported sharp drops in both total revenue and post-tax profit in 2019.

Total sales in 2019 fell nearly 76 per cent on-year to VNĐ41.52 billion, and post-tax profit slid 20 per cent on-year to VNĐ70.6 billion.

However, the company now holds VNĐ1.08 trillion in cash, equal to nearly 50 per cent of its total assets. In 2018, NDN paid a 16 per cent cash dividend and plans a similar rate for 2019.

The company's shares tumbled 3.6 per cent to end Thursday at VNĐ13,500 apiece. 

The dividend-to-share price here is 11.85 per cent.

Other companies that have paid higher dividend rates than banks’ saving rates include PetroVietnam Power Nhơn Trạch 2 JSC (HoSE: NT2) and Đồng Phú Rubber JSC (HoSE: DPR).

Power supplier PetroVietnam Power Nhơn Trạch 2 paid cash dividends from 2016-18 period of 36 per cent, 30 per cent and 24 per cent. In 2019, the company plans a payout of 25 per cent.

Its shares finished Thursday down 0.9 per cent at VNĐ16,650.

Meanwhile, rubber firm Đồng Phú set its cash dividend payment rates for 2016-19 at 40-50 per cent. Its shares gained 2.6 per cent on Thursday to close at VNĐ36,000.  VNS