I used to be already invested in DBS and OCBC earlier than the final bear market triggered by the COVID-19 pandemic and totally anticipated them to be essential revenue mills in my portfolio.
Though the native banks are nicely capitalized and have the power to take care of their dividends, the Financial Authority of Singapore (MAS) advised them to cap dividends final 12 months at 60% of what they have been earlier than.
Because the mud began to settle within the final bear market, I added UOB to my funding portfolio, regularly rising my investments in all three banks.
The shopping for went on for a number of months, began in April and went on until October final 12 months.
I used to be ready for a 12 months or two of decrease dividends from the native banks and, in actual fact, in my final two passive revenue updates, I stated that my bigger investments within the native banks ought to ship respectable dividends this 12 months however nothing spectacular.
I had very modest expectations.
Properly, excellent news as that is going to alter sooner or later as a result of the MAS has lifted dividend restrictions.
This can have a big effect on my passive revenue going ahead as going again to 100% of what they paid out up to now means a 66% improve in dividends from the native banks.
Since I elevated my publicity to the native banks somewhat considerably in 2020, there ought to be a fair larger bounce of their contribution to my passive revenue in comparison with 2019.
Issues are wanting up.
Hopefully, that is additionally an indication that the worst is behind us and that the broader economic system will do higher sooner or later.
“Whereas some uncertainties stay, Singapore’s economic system is anticipated to proceed on its restoration path, given strengthening world demand and progress in our vaccination program…” – MAS
Congratulations to fellow shareholders and good luck to all of us.
“Moody’s had modified its outlook on the Singapore banking system from adverse to steady in March, in recognition of the bettering economic system, potential for financial institution earnings to develop and broadly steady asset high quality.”
Added on 7 August 2021:
“…larger payouts of about 15 cents per share on common.”