Home News In print this week

Highest-yielding counters come with significant risks

Benjamin Cher
Benjamin Cher12/25/2017 08:00 AM GMT+08  • 4 min read
Highest-yielding counters come with significant risks
SINGAPORE (Dec 25): The US Federal Reserve is widely expected to raise the benchmark federal funds rate three times next year, with a median projection for a rate of 2.1% by end-2018. As interest rates rise, investors can expect to see some downward press
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

SINGAPORE (Dec 25): The US Federal Reserve is widely expected to raise the benchmark federal funds rate three times next year, with a median projection for a rate of 2.1% by end-2018. As interest rates rise, investors can expect to see some downward pressure on the market values of real estate investment trusts (REITs) and other yield instruments. That is because the market will demand increased compensation for the additional risk.

Some of the highest-yielding counters, however, are already trading at a substantial discount. Their values have mostly fallen over the course of the year, on the back of weaker earnings or an uncertain outlook. And there may be some opportunities for investors to pick up a bargain.

The counter with the highest yield is Asian Pay Television Trust, with an 11.21% trailing 12-month dividend yield. APTT booked a 7.7% y-o-y increase in revenue for 3QFY2017 ended Sept 30, to $84.5 million. However, its free cash flow for the quarter was just $20 million. This is below the $23.3 million needed every quarter to pay the 1.625 cents in distribution per unit. APTT’s cash flow comes mostly from monthly cable TV subscription fees. It owns the third-largest cable ­operator in Taiwan.

For more insights on corporate trends...
Sign In or Create an account to access our premium content.
Subscription Entitlements:
Less than $9 per month
Unlimited access to latest and premium articles
3 Simultaneous logins across all devices
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)
×
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.