Q&ACategory: Dividend StocksBank entry and exit price
Candy Lee asked 8 months ago
Hi!  Do we use the price to book ratio chart to determine entry and exit price for banks, or can we also rely on the method you taught for dividend stocks (eg plot share price vs div yield)? Is my understanding correct below: DPS of 2013 is to be derived from 2014 annual report, and we use this number to divide by share price in 2013?
4 Answers
Rusmin Ang Staff answered 8 months ago
Hi Candy, Yes, you can also use historical dividend yield. You will need to spot the low and high prices on their historical price. You probably can see it the low price during 2009, 2011, 2016, 2020. For example, if we are calculating the low yield during the 2015 low, we only have 2014 DPS because that's the data available to us at that point in time after the bank reported their FY2014 result.
Candy Lee answered 8 months ago
Hi Rusmin, I have attached what I managed to derive from OCBC annual reports.  Can you check if I am correct?  However, I am stuck :
  1. I don't have DPS for 2023 onwards (report not out yet?), so the data is always going to lag, eg there is no data from 2023 onwards while we are already in 2024
  2. How can I use info from this graph to determine entry and exit price?
Attachments
Rusmin Ang Staff answered 8 months ago

Hi Candy,

For the latest DPS, you can check from their recent full year result here. You can to see their 2023 full year dividend as well.

For the low yield in 2015, you did well. There is a also low yield in mid of 2015 (you can use 2014 DPS) and 2007. For high yield in 2020, you have to use 2019 DPS which should show you high yield of more than 6%. There are more high yield data that you can gather to get more reference points. You want to try the a few high yield point for 2009 (lehman collapse), 2011 (euro debt crisis), 2016 (oil crisis)?

Candy Lee answered 7 months ago
Hi Rusmin How does plotting more high yield data points help me to infer?  Does it mean anything near high yield is a good price to enter?
Rusmin Ang Staff replied 7 months ago

Having more data point will give you more insights on the yield range at different market condition. Yes, it will help us to get better pricing when it comes to buying and selling.