Investors worldwide are often driven by the pursuit of capital gains, hoping to sell their investments at a higher price than their initial purchase. However, the inherent risks associated with stocks, both internal and external, make it necessary for many investors to balance their portfolios with dividend stocks. These stocks provide a steady stream of income through regular dividend payments, offering a sense of security even when market conditions fluctuate.
Amidst the unpredictability brought about by events like the COVID-19 pandemic and the Russia-Ukraine war, Thai stock investors are advised to consider a dividend strategy to cushion themselves against unexpected market downturns. This approach proves particularly valuable during periods of market volatility.
Thai-listed companies have shown impressive resilience, rebounding swiftly from the impact of the COVID-19 pandemic. According to data from the Stock Exchange of Thailand (SET), these companies achieved a record combined net profit of over USD 31.25 billion (THB 1 trillion) in 2021.
Despite challenges posed by the Russia-Ukraine conflict and ongoing pandemic effects, Thai-listed companies continued their growth momentum into 2022. Their ability to withstand the adverse effects of COVID-19, coupled with Thailand’s reopening efforts, contributed to a 3% year-on-year increase in combined net profits, reaching USD 23.41 billion (THB 811 billion) in the first nine months of the year.
Shareholders of these companies received a total combined dividend payout of USD 18.41 billion (THB 645.62 billion) in 2022, marking a new historical high in the Thai stock market.
Among sectors, Energy & Utilities, Banking, and Information & Communication Technology emerged as the top three sectors in terms of dividend payments.
Over the past decade (2013-2022), the aggregate dividends distributed by Thai-listed companies amounted to USD 156.13 billion (THB 5.12 trillion). The peak season for dividend payments occurred between March and May, with 564 companies making a total of 846 dividend payments in 2022. Notably, the majority, 52.1%, of these payments took place in May alone.
Research conducted by the SET indicates that dividend yields consistently remained around 1.3 times higher than the average 12-month fixed rate offered by commercial banks during the period from 2018 to 2022. In 2022, the dividend yield of stocks listed on the main bourse stood at 2.44%, notably higher than the average 12-month fixed rate of 0.20% to 1.90%, even after Thailand’s policy rate was increased three times following the COVID-19 outbreak.
Notably, Thai companies listed in the Consumer Products industry group boasted an attractive dividend yield of 10.11% at the end of 2022. This was followed by the Industrials, Resources, and Property & Construction industry groups, which recorded dividend yields of 3.89%, 3.20%, and 2.66%, respectively.
Based on a brighter outlook for the Thai economy in 2023, it is reasonable to anticipate a strong performance from listed companies throughout the year. Furthermore, it is not far-fetched to expect these companies to continue their generosity in terms of dividend payments, as they have done in previous years.
This article is based on SET Note Vol. 3/2022: “Dividend festival: The important timing, seeking opportunity to pick dividend stocks.”