Below is an example of a leveraged dividend investment strategy using the Quality Priced Loan feature (For illustration purposes only).
Customer A, who provides a cash deposit of S$50,000, purchases up to S$175,000 worth of securities as shown in the table below.
| MARKET |
COUNTER NAME |
GRADE |
DIVIDEND YIELD ANNUALIZED (%) |
DIVIDEND ANNUALIZED (S$) |
Purchase Amount1 (S$) |
| SG |
SINGAPORE PRESS HOLDINGS LTD |
1 |
6.2992 |
2,204.72 |
35,000 |
| MY |
BOUSTEAD HOLDINGS BHD |
2 |
5.3508 |
1,872.78 |
35,000 |
| US |
CAN IMPERIAL BK OF COMMERCE |
3 |
5.2084 |
1,822.94 |
35,000 |
| HK |
PCCW TLD |
1 |
8.9078 |
3,117.73 |
35,000 |
| AU |
ABACUS PROPERTY GROUP |
1 |
8.5052 |
2.976.82 |
35,000 |
| TOTAL |
|
|
|
11,994 |
175,000 |
1The purchase amount is the same as the marginable value.
Based on the above illustration, the blended interest rate on the financing amount of S$125,000 made available to Customer A is 4.3%. (The blended interest rate is computed based on the proportionate value of Customer A’s holdings of each grade of security which has been charged to OCBC Securities Pte Ltd (“OSPL”) in relation to the financing). The net interest payable would thus amount to S$5,375 (4.3% of the S$125,000 loaned to Customer A under the Share Financing facility).
The table below summarizes the expected return Customer A would earn with and without the Share Financing facility. With the Share Financing facility, Customer A can expect to earn higher returns due to the lower initial outlay required for the investment.
| |
Cash Dividends Receieved (S$) |
Interest Payable (S$) |
Net Cash Return (S$) |
Initial Investment (S$) |
Net Return (%) |
| With Share Financing |
11,994.99 |
5,375 |
6,619.00 |
50,000 |
13.24 |
| Without Share Financing |
11.994.99 |
0 |
11,994.99 |
175,000 |
8.85 |
Important Notes
Investors should note that there are necessarily limitations and difficulties in using examples, tables or illustrations to provide a full explanation or depiction. Anyone wishing to participate in the Quality Priced Loan feature should contact OSPL for further details and advice. All information, statements, figures, content, explanations, examples, and details (collectively, the “Information”) contained above is intended for illustrative and/or information purposes only, and should not be relied upon for any purpose whatsoever. It is not advisable to buy or sell shares or take any action based on any Information reflected above. If you nevertheless wish to act based on the Information, it is entirely at your sole risk and responsibility. The Information is not to be construed as investment advice or recommendations by OSPL, and OSPL is not making an offer to buy or sell, or a solicitation of an offer to buy or sell the securities of any issuer. The Information also does not take into account the particular investment objectives, financial situations, or needs of individual investors.
No representation or warranty whatsoever (including without limitation any representation or warranty as to accuracy, usefulness, adequacy, timeliness or completeness) in respect of the Information provided herein is given by OSPL and it should not be relied upon as such. OSPL does not undertake an obligation to provide additional information, update the Information or to correct any inaccuracy that may become apparent at a later time. OSPL shall not be responsible or liable for any loss, damage, claims, demands, actions, proceedings or expenses whatsoever incurred or suffered by any person whether directly or indirectly howsoever in connection with or as a result of such person relying or acting on any Information provided or omitted herein. In no event shall the Information or any change, omission or error in the Information form any basis for any claim, demand or cause of action against OSPL and OSPL expressly disclaims liability for the same.
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