The Malaysian stock market boasts a handful of solid dividend blue chips. In fact, I bet there are more dividend counters in Malaysian than in Singapore. In terms of quantity, Malaysia’s stock market beats Singapore’s hands down. However, in terms of quality, I would pick Singapore’s 3 banks any day.
Here’s why – dividend plays are solid, stable companies that have weathered through tough times, grown and reached a certain size, and have a rather stable – or ideally, evergreen – business model. Stable in the sense of predictable earnings perpetually. And for that criteria to be met, you need to have a sizeable population, if the business primarily operates in its domestic market.
Malaysia’s population is almost 6 times more than Singapore’s. While Singapore’s population is surprisingly growing faster than Malaysia’s (thanks to talent immigration), the sheer size of Malaysia’s population and consumer market has helped a few local companies grow into solid dividend blue chips.
Here are 3 Malaysian dividend blue chips – a refresher for the Malaysians and, for Singaporeans, a Dividend 101 introduction to the Malaysia markets.
1. Malayan Banking Berhad (KLSE: MAYBANK)
It is pretty straightforward to introduce Maybank. Maybank is often considered the DBS Group Holdings Ltd (SGX: D05) of Malaysia. One key difference is their formation or incorporation – DBS was officially incorporated by the Government of Singapore, while Maybank was founded by Singaporean Tan Sri Khoo Teck Puat and Lei Tjong Le.
Both banks have thrived and grown to become systematically important not just domestically but also across ASEAN.
While Malaysians might not be as familiar with DBS, Singaporeans should recognise Maybank – the Singapore Maybank Tower is just right beside The Fullerton Hotel.
Both banks are tech-savvy and their respective apps – PayLah! and MAE – have become vital banking apps for Singaporeans and Malaysians. Both banks are the largest listed companies in their respective markets, and are great dividend players.
Maybank has been a generous dividend payer by track record. Although its dividend per share looks flat on the surface, by digging deeper, one of the main reason is the annual dividend reinvestment plan (DRP) that the bank offers.
The DRP programme is usually attractive for dividend investors, as it allows them to opt for dividends in the form of shares rather than cash. The ever-growing outstanding shares available might diluted the accretive dividends per share, but in total monies paid out every year, Maybank still dishes out more and more cash as dividends.
Hardcore and detailed investors would dive deeper and find many more differences between both banks. But from a simple surface-level comparison, even seasoned investors cannot deny both banks are evergreen dividend plays with solid business fundamentals. And from a dividend yield perspective, Maybank has been trading at a more enticing valuation versus DBS, consistently offering yields above 5%.
2. RHB Bank Berhad (KLSE: RHB)
While RHB might not be well known to most Singaporeans, it is one of the Malaysia’s Big 4 Banks, with 13% of its revenue deriving from Singapore and other ASEAN regions.
Compared to its Big 4 peers, RHB has been consistently growing. In 2024, it was the 2nd bank out of the Big 4 that delivered the most shareholders’ returns. Compared to its peers, it has an ace up its sleeves – it owns 40% of Boost Bank, a digital bank in Malaysia with joint investment from Boost Holdings. This gives RHB the best of both worlds – it is still growing in the mainstream banking scene, while having the digital banking catalyst as potential tailwinds.
The COVID-stricken FY 2020 saw earnings and fundamentals badly affected by loan delinquency concerns, but RHB rebounded strongly and has since posted better profits and record dividends per share for the last 3 years.
There are 2 sides of a coin when it comes to picking banking stocks to invest in Bursa Malaysia. The bears would argue that banks cannibalise each other, and all banks don’t really have an economic moat.
But on the flip side, a bank’ success boils down to operating efficiency, prudence and also shrewd moves that a bank can make to outperform its peers. It is a business sector where David can beat Goliath. Currently, RHB trades at a dividend yield of roughly 6.4%, a rather enticing yield for a bank that still has room to grow.
As long as Malaysia continues to grow, his small yet promising bank still has ample runway for expansion.
3. Sime Darby Berhad (KLSE: SIME)
Sime Darby (SIME), albeit potentially the most foreign company to Singaporeans, might still be easy to relate to.
Just think of Jardine Cycle & Carriage Ltd (SGX: C07) – but on a much larger scale. SIME is one of the largest automobile and industrial machine distributors in Asia. The exclusive distributorship that it has under its belt dwarves the brands that Jardine Cycle & Carriage offers.
From Malaysia’s beloved 2nd national car brand – Perodua, to Japanese car brand Toyota, and even the luxury marques of BMW and Ferrari NV (NYSE: RACE), SIME has a strong grasp in automobile distributorship. It also has a few assembly lines for Completely Built Up models (CBU).
Not to also mention, that it boasts a vast and diversified geographic presence spanning China, Japan, South Korea, ASEAN and even down south – Australia and New Zealand. It is also one of the largest Caterpillar Inc (NYSE: CAT) distributors as well.
While top line has been growing steadily over the last 10 years, the distributorship and assembly business is not without its caveats. Per-unit sales is crucial as distributors are incentivised to push for sales, while ensuring they have healthy stock levels. Any mismatch in demand and supply forecast can have short term effects on its profitability.
The distributorship business might not be one with a wide economic moat, but so long as there is a wide selections of vehicle choices, and the ability to quickly pivot to offer relevant models or types of vehicles for the future, it should be a rather evergreen business to invest in. At least SIME’s growing DPU for the past 5 years is reassuring. At a dividend yield of close to 6%, it definitely looks far more attractive than Jardine Cycle & Carriage.
Stability and predictability is all that matters for dividends
Of course, that would be my punchline when it comes to picking dividend stocks. As I slowly aged as an individual and investor, I find myself giving punchlines more often when it comes to investing-related discussions.
But punchlines can be sucker punches if one does not really grasp and understand the true essence or lessons to be delivered. All 3 companies mentioned here are definitely blue chips and have proven their mettle throughout time.
That said, they might not have the best economic moat in the world, as I have continuously reiterate. But due to their size, they are not easily replaced by competitors.
They are stable and reliable, as of now. As for the right price to buy for interested investors, I urge you to dive deeper before making any investment decisions!
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