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DBS’ dividend per share may reach S$1.08 this year, says analyst

DBS, Southeast Asia’s biggest bank, has a solid capital position that could enable it to increase its dividend per share soon, analysts believe.

  • DBS Group’s (SGX: D05) share price falls 0.7% to S$25.18 a share
  • Its dividends may rise to S$0.90-1.08 per share for 2021, according to two research teams
  • Analysts also foresee its return on equity (ROE) improving in the near future
  • Looking to trade DBS shares? Open an IG account today.

DBS share price: What’s the latest?

Shares of DBS Group were trading in the red on Wednesday (06 January 2021), dropping about 1% to a low of S$25.10 at around 9:46 SGT.

The stock regained some ground to S$25.18 at 10:51 SGT, down 0.7% on the day, with 1.2 million shares changing hands.

Southeast Asia’s largest bank was the most heavily traded stock in 2020 on Singapore’s bourse, clocking the highest average daily turnover of S$134 million, far exceeding the next highest of S$83 million by Singtel (SGX: Z74).

The Singapore Exchange said in a market update this week that DBS recorded a 34% turnover growth in 2020.

Will DBS bump up its dividends this year?

As at Tuesday, 10 out of 20 analysts said DBS was a ‘buy’, eight recommended ‘hold’ while two rated it a ‘sell’, according to Bloomberg data. Their average 12-month target price stood at S$26.13.

RHB analysts projected that DBS’ dividend per share could rise to S$0.90 in 2021, from S$0.74 in 2020. This is because the lender’s capital position is ‘solid’ with its Common Equity Tier 1 (CET1) at ‘a very comfortable 13.7%’, which should safeguard dividend prospects, the analysts said.

Assuming the Monetary Authority of Singapore does not interfere with the banks’ dividend policy, UOB expects DBS to pay out a dividend of S$1.08 per share for 2021 and S$1.32 for 2022, representing a dividend yield of 4.2% and 5.1% respectively.

UOB also estimated that DBS’ full-year 2020 provisions would come in at S$2.9 billion and drop to S$1.6 billion in 2021.

On the impending competition from digital-only banks in Singapore, the brokerage noted that the city-state’s incumbent players are IT savvy with strong digital capabilities, with DBS clinching the title of world’s best digital bank in 2016 and 2018.

UOB rated DBS a ‘buy’ with a S$26.75 target price.

Higher fee income and loan demand

Meanwhile, RHB believes DBS is on its way to a sustained recovery in its ROE in 2021-2022. The research team upped its target price to S$30.00, from S$25.20, while keeping its ‘buy’ rating.

‘Aside from lower credit costs, the pickup in economic activities will underpin continued improvements in fee income growth and loan demand,’ RHB added.

DBS is also ahead of its peers thanks to its acceleration in digital adoption, spurred by the Covid-19 pandemic, the analysts wrote.

Moreover, Singapore’s short-term interest rates are likely to stay low for longer. DBS is thus aiming to prop up its net interest margin - a key indicator of a bank’s profitability - by managing the excess liquidity built up from robust deposit growth, and reprice its deposits lower.

How to trade DBS with IG

Are you feeling bullish or bearish on DBS Group’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <DBS Group Holdings> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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