INVESTORS should buy Public Bank Bhd and Carlsberg Brewery Malaysia Bhd and other Malaysian companies with “attractive” dividend yields to ride out the stock market’s volatility, RHB Research Institute Sdn said.
“Dividend yield plays are once again attractive,” RHB Research said in a report today.
“We recognise the market’s volatility as a sign that valuations on current earnings estimates have become stretched and a market correction would be an opportunity to buy the fundamentally more robust stocks.”
Investors should also add shares of Hai-O Enterprise Bhd, a seller of Chinese wines, herbs and medicines, Tanjong Plc and chipmaker Malaysian Pacific Industries Bhd, as an economic recovery in 2010 will make the companies’ earnings prospects “assured,” the report said.
The benchmark FTSE Bursa Malaysia KLCI Index, which has gained 32 per cent this year, has increased less than 0.1 per cent this month. A gauge of the index’s 30-day historical volatility advanced to 13.05 today, the highest level since July 28. The KLCI rose 0.5 per cent to 1,161.48 as of 11:27am.
Hai-O has a dividend yield of 7.8 per cent, the highest among RHB Research’s dividend stock picks, while Public Bank offers a 6.5 per cent return, and Carlsberg has a 5.7 per cent yield, according to the report. That’s higher than the 10-year Malaysian government securities’ 4.17 per cent yield, it said. The benchmark index offers a 3.7 per cent dividend return, according to data compiled by Bloomberg.
The government, which has forecast an economic contraction of as much as 5 per cent in 2009, expects the economy to return to growth in the fourth quarter. - Bloomberg