SINGAPORE (Dec 10): In a recent report, KGI Securities highlighted some dividend-yielding stocks in a one-page report titled “High Dividend Watchlist”. According to the broker, these stocks offer higher growth compared with real estate investment trusts (REITs), but are more volatile. The amount of dividends paid out depends on a company’s earnings, and the dividend payout ratio is the ratio of dividends to net profit, or the ratio of dividend per share (DPS) to earnings per share (EPS). 

REITs have to pay out at least 90% of distributable income to enjoy tax transparency. Hence, if they need to make acquisitions for growth, they have to lean on their unitholders and investors to raise equity, which gives rise to questions as to whether the new assets are accretive to distributions per unit and yield.

Companies are more flexible. Their management and boards can decide on their payout ratios depending on investment and capital expenditure needs, cash and debt levels, and earnings. 

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