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Published on March 19, 2008

Dividend-growth investment is one of the simple strategies that the richest man in the world, Warren Buffett, uses to accumulate his wealth.

Smart investors realise that the safe way to build wealth is to buy stocks that consistently pay dividends, as in the best-case scenario they can enjoy double gains from share price rises and dividends. In a worst-case scenario, dividends can partly offset losses from a decline in stock prices.

To mitigate risk, however, investors should also take the business outlook into account, in addition to dividends. Given cheap stock prices, the Thai stock market provided an average dividend yield of 4.09 per cent for 2004's performance, 4 per cent for 2005, 4.4 per cent for 2006 and 3.63 per cent for last year.

Based on the closing price last Friday, companies listed in the SET100 with their excluding dividend (XD) sign to be posted from March 25 to May 7, offer dividend yields of between 1.15 per cent to 9.66 per cent. The yields are considered attractive compared with interest rates of 0.75-1 per cent provided by savings accounts.

Seven listed companies offer yields of 5-9 per cent, 16 at 2-4 per cent and 11 at around 1 per cent. However, some paid interim dividends for an earlier period of 2007's financial operations.

The dividend yield is likely to be even greater, as the Stock Exchange of Thailand has been falling this week.

Tisco Bank-preferred share yields the highest among the SET100 at 9.66 per cent, if investors scooped up it at the closing price on Friday.

Tisco's common shares also offer vibrant returns. Stockholders will obtain an annual dividend payment of Bt1.80 per share, representing a 6.49-per-cent yield based on Friday's closing price.

Tisco Bank's dividend-yield track record has been pretty high. According to the Stock Exchange of Thailand's data, the stock yielded 9.09 per cent for 2006's performance and 4.63 per cent for 2005.

Bualaung Securities has recommended "buy" on Tisco's stock, given its steadily high dividend return and its strong capital adequacy ratio at 12 per cent, which is sufficient for at least two years of business expansion without recapitalisation.

Hana Microelectronics, an electronic-components producer, has provided a 7.22-per-cent dividend yield, but securities analysts cast doubt over its business prospects, pressured by the baht's appreciation and the health of the US economy.

Ticon Industrial Connection has given a 6.42-per-cent yield, Thai Plastic & Chemical 6.22 per cent, Sansiri 6.05 per cent and Sahaviriya Steel Industries 5.56 per cent.

KGI Securities (Thailand) yielded 5.26 per cent, Krungthai Card 5.08 per cent and Kiatnakin Bank 4.56 per cent.

Analysts recommended "buy" on Ticon's stock and points out that it will benefit from the recovery of investor and consumer confidence and pay attractive dividends.

However, they rate "hold" for Kiatnakin Bank, as its profitability remains unattractive though the small bank pays high dividends.

There are many stocks paying dividend yields of 3 per cent and securities analysts recommended "buy" for Phatra Securities, Rojana Industrial Park, Siam Cement, Hemaraj Land and Development, and Advanced Info Service.

Oranan Paweewun

The Nation