The stock market's narrow breadth -- or tighter trading range -- is ushering in a golden era for dividend-paying stocks as income investors can earn money regardless of whether the market is rising, falling or stagnant.
The ongoing earnings season for the second quarter has also whet investors' appetite for high-yielding dividend stocks as hundreds of listed companies will pay interim dividend after the quarterly net profit announcement.
Dividend-paying stocks are typically less risky than those of companies that do not pay dividends, and are an appealing investment for those who want to build up wealth or even retiring as they offer a source of regular income, in addition to capital gain.
But it does not mean that all stocks that pay dividend will be a worthwhile investment, as the company that paid high dividend last year may not pay it again this year or next. Dividend plays that investors should own in their portfolio are those with regular dividend payment track records, steady increase in the payment amount over time, and yield of 4% or higher.
Top interim dividend plays
Asia Plus Securities, which has 170 stocks under its coverage, has narrowed down the list of best interim dividend-paying stocks to 23. These stocks all met the securities broker's criteria -- paying interim dividend for at least four straight years (2013-16) and at least 4% in estimated dividend yield based on their share price on July 25.
Below are the stock broker's 10 highest interim dividend-yielding stocks for this year's operating results.
Kiatnakin Bank (KKP)
Estimated dividend yield: 8.8%
Kiatnakin Bank is a commercial bank with two core businesses -- banking and capital market. Auto loans represent 58.3% of the bank's total outstanding loans. The stock's sell-off emerged after it delivered disappointing net profit for the three months in terms of both year-on-year and quarter-on-quarter to June at 1.19 billion baht and its gross non-performing loan (NPL) ratio rose to 5.8% at the end of June from 5.6% at the end of last year.
Asia Plus recommends that the decline in share price represents buying opportunity as its capital market business has strong potential and the bank is expected to continue yielding high dividend.
The stock's dividend payment over the past three years rose to six baht per share for last year's financial performance (two baht for first half) from three baht for 2015's (one baht for first half) and 1.85 baht for 2014's (50 satang for first half). The bank pays dividend twice a year.
Prime Office Leasehold Property Fund (POPF)
Estimated dividend yield: 7.7%
The fund invests in the leasehold rights of the 83,502-square-metre United Business Center 2 building, and the 49,594-sq-m Bangna Tower for 30 years, and the 176,025-sq-m Ploenchit Center for 14 years. United Business Center 2 building is located on Sukhumvit Road, Bangna Tower is on Bangna-Trad Road, and Ploenchit Center is located on Sukhumvit Road.
According to the fund's website, occupancy rate of United Business Center 2 building stood at 84%, Ploenchit Center at 97% and Bangna Tower at 99% at the end of March.
The property fund's dividend is paid every quarter. POPF paid dividend of 1.05 baht per unit for both the 2015 and 2016 financial years.
Sena Development Plc (SENA)
Estimated dividend yield: 7.2%
The company is a mid-size property developer. It also develops commercial properties for rent -- warehouses and community malls -- which include Sena Warehouse Sukhumvit 50 and Sena Fest mall.
The company pays semi-annual dividends; it paid two satang per share for the 2014 earnings plus stock dividend of one new share for every 14 shares held for the first half and another one share for every seven held for the second half. The company paid dividend of 10 satang per share for the 2015 financial results, and 20 satang plus stock dividend at a ratio of 16:1 for last year.
Land and Houses Plc (LH)
Estimated dividend yield: 6.9%
It is a large property developer, which owns a 24.98% stake in Quality Houses Plc (QH), a 33.98% stake in LH Financial Group Plc -- a financial holding firm and parent of Land and Houses Bank -- and a 30.2% stake in Home Product Center Plc (HMPRO).
The broker estimated that LH would deliver robust second quarter net profit, driven by ownership transfer of its two residential projects. Besides, an extra gain of 1 billion baht from selling Grand Centre Point Ratchadamri to LH Hotel Real Estate Investment Trust (LHHOTEL) in June would boost the property developer's bottom line for the three months to June.
LH pays dividend twice a year. The company paid 8.9 satang per share for the 2014 financial operation plus dividend stock at a ratio of 8:1 for the first half and 15:1 for the second half. Its dividend amounted to 25 satang a share for the 2015 financial results and 27 satang for last year's.
Thai Vegetable Oil Plc (TVO)
Estimated dividend yield: 6.9%
The company is a manufacturer and distributor of soybean cooking oil under its A-ngoon brand name. It also produces other soybean products including soymeal, full-fat soy, cooked and unextracted soybean seed, and lecithin.
It pays semi-annual dividend. TVO's dividend payment increased in the past three years, with 1.75 baht per share for earnings in 2014, 1.9 baht for 2015 and 2.75 baht for last year.
Krungthai Car Rent and Lease Plc (KCAR)
Estimated dividend yield: 6.9%
The company provides vehicles for rent and lease contracts to consumers and organisations.
It pays dividend twice a year. Its dividend payment jumped to 1.02 baht per share for last year's operation from 45 satang in 2015 and 47 satang in 2014.
Samui Airport Property Fund (Leasehold) (SPF)
Estimated dividend yield: 6.7%
The property fund invests in leasehold rights to operate Samui Airport for 30 years through 2036. Bangkok Airways, the fund's sponsor, has voluntarily agreed to retain a stake of at least 25% in the fund for 20 years and it has been steadily raising its stake in SPF from 25% since 2015 to 32.7% currently.
The fund pays dividend on a quarterly basis to its unitholders. Its dividend payment steadily rose to 1.48 per share for 2016 financial performance, from 1.36 baht for 2015 and 1.24 baht for 2014.
CPN Retail Growth Leasehold Property Fund (CPNRF)
Estimated dividend yield: 6.7%
The fund invests in four shopping complex projects -- Central Plaza Rama II, Central Plaza Ratchada-Rama III, Central Plaza Pinklao and Central Plaza Chiang Mai Airport -- and two office towers in Pinklao.
According to the fund's website, occupancy rate for Central Plaza Rama II stood at 84.8%, Central Plaza Rama III at 86.9%, Central Plaza Pinklao at 95.7%, Central Plaza Chiang Mai Airport at 94% and office buildings in Pinklao at 90% as of March 31.
The company pays dividend every quarter. It paid dividend of 1.01 baht per unit for the 2015 operating results and 1.15 baht for 2016.
Quality Houses Plc (QH)
Estimated dividend yield: 6.6%
The company is engaged in property development and has branched into banking and distribution of building materials by holding a 21.3% stake in LH Financial Group and a 19.9% stake in HMPRO.
It pays dividend twice a year. It paid dividend of 26 satang per share plus dividend stock at a ratio of 6:1 for the 2014 financial results, 14 satang for 2015 and 15 satang for last year's.
Ticon Property Fund (TFUND)
Estimated dividend yield: 6.5%
The property fund invests in lands and ready-built factories and standard warehouses of TICON Industrial Connection Plc (TICON) and TICON Logistics Park in industrial estates, industrial promotion zones and industrial parks and projects.
Other investment includes lands and factories in Amata City Industrial Estate, Amata Nakorn Industrial Estate, Bang Pa-In Industrial Estate, Bangpu Industrial Estate, Pinthong Industrial Estate, Rojana Industrial Park and Nava Nakorn Industrial Promotion Zone.
The fund pays dividend on quarterly basis. It paid 65 satang per unit for earnings in 2015 and 59 satang for 2016.
Four top picks
Asia Plus Securities' top four picks are KKP, Thanachart Capital Plc (TCAP), LH and Ratchaburi Electricity Generating Plc (RATCH), saying these stocks pay interim dividend regularly, their fundamentals are strong and they have a 93.8% possibility to yield positive return and average return of 6.89% for this year's earnings if bought one month ahead of the ex-dividend (excluding dividend) date and sold one month after XD.
KKP, TCAP ans LH have 100% potential to offer positive return to shareholders, with return from capital gain at 9%, 8.74% and 6.01%, respectively.
RATCH has a 75% chance, with return from capital gain of 3.79% if it is piled up one month before the XD date and unloaded one month after XD date.
The broker said that TCAP's valuation remains attractive, while its net interest margin (NIM) is expected to be kept at a high level due to a rising momentum in auto loan and an increase in income proportion of high-yielding products such as car refinancing and used car loan.
Auto loan is the main lending portfolio of Thanachart Bank, a subsidiary of TCAP.
For RATCH, a leading private power-generating company, Asia Plus Securities forecast that the hot season would boost demand for electricity and the company's net profit for the April-to-June quarter. An absence of maintenance shutdown of the company's plants in the second quarter, and all of its plants running at full capacity, would also give a boost to its bottom line.
