Time to Sell STI ETF? - Dividend Machines by The Fifth Person

Q&A › Category: Dividend Stocks › Time to Sell STI ETF?

X Yee asked 4 months ago

Hi Rusmin/Victor

I bought STI ETF shares in tranches in year 2020, with an average cost of about $2.50 per share.

With the current market price of about $3.80, if sold, my capital gain would be about 10 year's worth of dividend (based on the 5-year average annual dividend). My dividend yield (based on my cost) has increased from 2.4% to 5.3% over the years.

The STI has passed its 17-year high and I wonder whether it will surpass its all-time high of 3,900 in the near future if talk of stimulating interest in our market goes through.

Please advise on how should I decide whether (a) to take profit now or (b) stick to my intent of receiving passive income when setting up my portfolio. (I do not have alternatives yet that will give me the same yield if I sell the shares.)

Thank you in advance.

2 Answers

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Rusmin Ang Staff answered 4 months ago

Hi X Yee Congrats. Look like you got them a good pricing! Generally, if we are buying into index ETF, I would think it makes sense to hold long-term if you're confident with the country's economy, i.e. Singapore. We can always considering trimming down some, if we feel that the market is slightly overheated then buy it back later. Again, it is not easy to time the market but I think trimming some can minimise regret down the road (if the market crashes later). Right now, the valuation of STI is above the average which suggests that the market is slightly overvalued.

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X Yee answered 4 months ago

Thank you, Rusmin, for your prompt reply.