UOB Kay Hian
Date of Report: 8 September 2025

Singapore Income Investing 2025: High-Yield Equity Picks Shine as Bond Yields Retreat

Singapore Dividend Strategy: Why Equities Trump Bonds in 2025

As Singapore government bond yields trend lower, the gap between fixed income and equity yields has narrowed noticeably in 2025. This dynamic makes high-dividend stocks increasingly attractive to investors seeking both yield and upside potential. With the 10-year Singapore Government Bond yielding just 1.86% (as of 4 Sep 2025), select equities now offer yields in the 4-6% range, coupled with the prospect of capital gains and dividend growth, providing a compelling case for a portfolio rotation into quality income equities.

Dividend Sustainability: The Hallmarks of a Reliable Yield Play

UOB Kay Hian’s screening process zeroes in on companies outside of the banking and REIT sectors, focusing on those with:

• Dividend yields above 4%.
• Consistent increases in dividend per share (DPS) from 2022 to 2025F.
• Low gearing (net debt/equity of around 20% or less).
• Strong cash flow visibility and robust balance sheets.

These criteria ensure that selected companies can sustain and potentially grow dividends, even in volatile economic environments. Unlike bond coupons, dividends have the potential to rise with earnings, acting as a quasi-inflation hedge without sacrificing capital appreciation opportunities.

Key Singapore High-Yield Stock Picks for 2025

After rigorous screening, UOB Kay Hian highlights the following ten non-bank, non-REIT stocks as the most attractive high-yield plays for 2025:

Market Outlook: STI Target and Valuations

UOB Kay Hian’s end-2025 STI (Straits Times Index) target is set at 4,602, implying around 7% upside from current levels. This is based on a blend of top-down (forecasting 2026 earnings growth of 5% for index constituents) and bottom-up methodologies (using UOB Kay Hian’s target prices for covered stocks). At this target, the STI would trade at a forward PE of 13.4x — not considered stretched for a market rich in defensive, high-quality names. With a 10% PE premium, the STI could potentially reach 4,877.
STI valuations remain attractive:

• 2025F PE: 13.6x (12% discount to long-term average)
• 2025F P/B: 1.4x (7% discount to long-term average)
• Dividend yield: ~5.2%, about 18% above Asian peers’ median

Despite a 12% year-to-date rise and 16.5% total return, the STI continues to offer a robust yield and improved ROE over the past three years.

US Rate Cuts: Limited Impact on Singapore’s Yield Outlook

While US Federal Reserve signals a dovish shift — with rate cuts expected in the next 6-12 months amid a softening US labor market and recessionary payroll trends — Singapore’s interest rates have already declined faster than those in the US. For local investors, this means dividend yields of 4% or higher remain extremely attractive, especially with two-year fixed mortgage rates at just 1.65% and the Singapore Overnight Rate at 1.41%.

Comprehensive Company Analysis: Singapore Market Leaders

Below is a summary of UOB Kay Hian’s key recommendations, including both large-cap and selected small/mid-cap stocks across various sectors. These picks are supported by robust dividend yields, solid fundamentals, and sector-specific catalysts.

Sector Snapshots: Additional Singapore Blue Chips and Mid-Caps

Banks: OCBC stands out with a 5.8% yield and an 11.9% ROE, while DBS and UOB also offer solid returns.
Shipyards: Keppel, Sembcorp Marine, and YZJ Shipbuilding are highlighted for their stable yields and strong order books.
Plantations: Bumitama Agri, First Resources, and Wilmar remain sector leaders with robust cash flows and attractive payouts.
Technology: Venture Corp and Valuetronics provide reliable dividends and resilient business models.
Property/REITs: CapitaLand Investment, Mapletree Industrial, and Far East Hospitality Trust offer stable income and upside from property market recovery.
Transport/Consumer: ComfortDelGro and Genting Singapore deliver both yield and exposure to recovering mobility and tourism.

Conclusion: High-Yield Singapore Equities—A Compelling Alternative to Bonds

With the yield gap between Singapore government bonds and top-quality equities at a multi-year high, investors are incentivized to rotate into high-dividend stocks. UOB Kay Hian’s stock screens and recommendations reveal a robust list of companies with sustainable dividends, healthy balance sheets, and reasonable valuations. As Singapore’s market valuations remain undemanding and domestic rates drop faster than US rates, these yield plays are set to outperform, rewarding investors with both income stability and capital appreciation in 2025.