DBS, OCBC or UOB: Which bank gives you the greatest dividend yield?

PHOTO: The Straits Times

Our local banks are known to offer solid dividends. Here’s how much shareholders would have received in 2020 by investing in each of these banks.

DBS, OCBC and UOB are the banks that locals would be familiar with, being institutions that Singaporeans bank with on a daily basis.

Chances are, we’ve all kept our money in their bank accounts, swiped their credit cards, made investments and took out a loan. 

Besides real estate investment trusts (REITs), bank stocks are also the stalwart blue chip stocks that hardly fail to reward shareholders with dividends. Here’s a look at the dividends these three big banks gave out in 2020 and the yield relative to their trading price. 

Total dividend yield for 2020 per share Last traded price (8 Jan 2021)  Dividend yield (based on Jan 8, 2021 last traded price)
DBS $0.18 per share (Scrip price: $23.93)
$0.18 per share (Scrip price: $21.04)
$0.33 per share
$0.33 per share
Total: $1.02 per share
$27.42 3.8 per cent
OCBC $0.159 per share (Scrip price: $7.81)
$0.28 per share 
Total: $0.439 per share
$10.73 4.1 per cent
UOB $0.39 per share (Scrip price: $19.52)
$0.20 per share
$0.55 per share
Total: $1.14 per share
$24.20 4.7 per cent

The total dividend yield given last year gives a pretty good gauge of how much investors can expect to receive in the following year.

However, 2020 was hardly an ordinary year. Banks had to cap their dividends per share for FY2020 at 60 per cent of FY2019’s dividend per share. Shareholders were also given the option to take scrip instead of cash. 

Let’s take a closer look at these three banks and how you can invest in their stocks.

1. DBS 

Leading the pack is DBS bank. For the third year in a row, DBS was named the ‘Best Bank in the World’.  

With a market cap of nearly $70 billion, DBS holds the heaviest weight on the Straits Times Index (STI) — an index that tracks the performance of the top 30 companies in Singapore — at 16.9per cent.

Here’s an overview of the dividends shareholders would have received in 2020.

Dividend Per Share Pay Date Scrip Price (per share)
$0.18 (Q3 2020 interim dividend)  Dec 29, 2020 $23.93
$0.18 (Q2 2020 interim dividend)  Oct 5, 2020 $21.04
$0.33 (Q1 2020 interim dividend)  May 26, 2020 NA
$0.33 (Final dividend for FY2019) May 26, 2020 NA

In 2020, shareholders would have received dividends that totalled $1.02 per share. This means that if you held 1,000 DBS shares, you’d have gotten $1,020 in dividends. For comparison, in 2019 (pre-COVID), shareholders received $1.50 per share in their bank accounts.

DBS also offered scrip dividends to investors in 2020, first at $21.04 for the Q2 interim dividend and then at $23.93 for the Q3 interim dividend — prices that look like a steal today with DBS trading upwards of $27 per share. 

Based on past announcement dates, DBS will be announcing their final dividend for 2020 some time mid February, with the pay out of the dividend in May. 

2. OCBC 

OCBC’s been in the news recently for the appointment of their first female CEO, Helen Wong, who will be taking over the reins from current CEO Samuel Tsien on April 15 2021.

Out of the three banks, OCBC is the lowest priced of the lot. In fact, its current trading price is less than half the price of DBS or UOB, making it no surprise that the dividends per share are also much lower. However, OCBC still has a large market cap of about $33.2 billion, making up 10.8per cent of the STI.

Here’s an overview of the dividends shareholders would have received in 2020.

Dividend Per Share Pay Date Scrip Price (per share)
$0.159 (2020 interim dividend) Oct 7, 2020 $7.81
$0.28 (Final dividend for FY2019) June 5, 2020 NA

In 2020, shareholders would have received dividends that totalled $0.439 per share, relatively close to the $0.48 per share given out in 2019. If you held 1,000 OCBC shares, you’d have gotten $439 in dividends. 

The 75 per cent of shareholders that opted for scrip at a discounted price in June 2020 are sitting happy on a 35per cent gain in share price, with shares of OCBC now trading between $10 to $11 per share.

3. UOB 

Last but not least, we have UOB bank. Giving the highest amount in dividends in 2020 amongst the three banks, UOB shareholders would have received dividends that total $1.14 per share. This means that for every 1,000 UOB shares you hold, you’d have gotten $1,140 in dividends. 

The smallest market cap of the three banks, UOB’s market cap is close to $30 billion, making up 9.7 per cent of the STI. 

Here’s an overview of the dividends shareholders would have received in 2020.

>Dividend Per Share Pay Date Scrip Price (per share)
$0.39 (2020 interim dividend) Oct 13, 2020 $19.52 
$0.20 (Special dividend for FY2019) June 29, 2020 NA
$0.55 (Final dividend for FY2019) June 29,  2020 NA

Trading closer to DBS’ stock price than to OCBC, UOB’s last traded price on Jan 8, 2021 was $24.20 — nearly $5 more than the scrip price given back in October. 

Although UOB gave the highest dividends in 2020, looking back at 2019, UOB gave out dividends of $1.25 per share, lower than the $1.50 per share given by DBS.

ALSO READ: DBS, OCBC and UOB: How did they perform for 2020 first-quarter?

How to invest in these bank stocks?

If you’re keen to get into the bank stocks game, whether it’s for dividends or capital gains, here are the ways for you to get started. 

1. Purchase the stock directly on the stock market

DBS, OCBC or UOB: Which one will you be banking on?

If you’ve made your choice, you can start investing in the bank stocks by purchasing the stocks directly from the stock market using your brokerage account. 

2. Start a Regular Savings Plan (RSP) 

Alternatively, you can also start a regular savings plan that allows you to make recurring investments by automatically purchasing the security each month. For example, with POEM’s Share Builders Plan, all three banks are counters that you can invest in with a minimum of $100 each month.

3. Purchase an Exchange Traded Fund (ETF) that tracks the STI

If all three banks appeal to you and you can’t come to a decision, fret not. 

You can always opt to invest in an ETF that tracks the STI, such as the Nikko AM STI ETF or the SPDR STI ETF, especially as bank stocks make up more than 37 per cent of the STI in weightage.

This could also be an option for those that are unable to afford a substantial purchase of the bank stocks — just 100 lots of DBS shares would already cost $2,700. 

The STI includes a total of 30 companies, which means you’d be investing in stocks such as REITs and other blue-chip stocks as well, giving your investment the diversification it needs.

To purchase an ETF, you can buy it directly using your brokerage account, or start an RSP that purchases the ETF each month. 

This article was first published in SingSaver.com.sg.