Governmental bond rates globally have declined on expectations of a slower economic growth. Our target prices for these two top pick stocks have been stress-tested on the high possibility of a Fed rate cut and the clear decline in Singapore Government Securities (SGS) across a 10-year period.
We have evaluated on a lower risk-free assumptions for our picks, and also their earnings potential and scope for yield compression.
ComfortDelGro (CMDG.SI) / Current share price: SGD$2.580 / Conservative entry price: SGD$2.560 or lower / Target price: SGD$2.80
Dividend Yield is at 4.1% at a fair value that is above its 5-year average yield of 3.9%. Collect your dividends patiently and make the capital margins on it.
Netlink NBN Trust (CJLU.SI) / Current share price: SGD$0.885 / Conservative entry price: SGD$0.870 or lower / Target price: SGD$0.930
Dividend Yield is at a fair value of 5.4%.