DBS Preference Share (SGX Stock code: MU7)
is currently trading at SGD 101.48 per share.
Should investors buy at current price and hold it to
maturity, where a first and final call for redemption expected to be announced
on 23 Nov 2020, investors stand to receive 2 more dividend payments in May and
November 2020 as well as redemption at par of SGD100 per share. After
accounting for transaction costs, holding period yield of 9 months comes to be
about 2.7% with corresponding annualized yield of 3.9%. In view of the market
turmoil due to the COVID-19 crisis, investors could count on Singapore’s
largest lender DBS to honour its redemption and dividend obligations.
Final thoughts:
Pros: Potential higher than risk free FD dividend yield.
Cons: Lock up on funds till expected
maturity in end November 2020.
Note: This is not an investment advice. Buy
and sell any securities at your own risk.
Disclosure: Long DBS Preference Share.
