Dividend payout: EPF may do better than ASB

The EPF likely made its gains from its investment portfolios which are mostly bonds and overseas market investments

by AZREEN HANI / pic by MUHD AMIN NAHARUL

THE Employees Provident Fund (EPF) is said to be considering a dividend payout of between 5% and 6% for 2020, bucking the trend on lower yields in a pandemic year.

Sources familiar with the EPF said such a dividend, which is comparable to last year’s payout, would exceed Permodalan Nasional Bhd’s (PNB) 4.25% dividend for 2020, making it the first time the retirement fund has outperformed PNB’s benchmark Amanah Saham Bumiputera (ASB).

“Unlike PNB, EPF’s assets are mostly in bonds and also overseas (investments).

“It is possible for (EPF) to give a better dividend as PNB does not have these factors. PNB has more equities, and therefore, will suffer if it has more impairment (loss),” said the source.

In the last 18 years, the highest dividend rates EPF paid was 6.9% in 2017 and 6.75% in 2014.

In total, the payout for 2017 amounted to RM48.13 billion, an increase of 29.8% from 2016.

At the time, EPF said its landmark performance came after it diversified investment into overseas markets to take advantage of global assets to realise gains from varied markets and asset classes.

For 2019, the EPF, one of the world’s oldest and largest retirement funds, declared a dividend of 5.45% with a payout amounting to RM41.68 billion for “Simpanan Konvensional” — the lowest in more than a decade.

The fund declared a dividend rate of 5% for “Simpanan Shariah” in 2019, with a payout amounting to RM4.14 billion, making the total dividend payouts at RM45.82 billion for the year.

In comparison, for its 2019 financial year, PNB announced a distribution payout of 5.5 sen per unit for ASB. The payout comprised an earning of five sen a unit and a further bonus of 0.5 sen.

Last month, PNB announced a distribution payout of 4.25 sen per unit plus an “Ehsan” payment of 0.75 sen for the first 30,000 units for its flagship fixed-price unit trust fund ASB for the financial year ending Dec 31, 2020 (FY20).

The ASB income distribution comprised a 3.5 sen distribution and 0.75 sen of base bonus.

The Ehsan payment of 0.75 sen was for the first 30,000 units declared in conjunction with the 30th anniversary of ASB.

The Malaysian Reserve (TMR) previously reported economists’ had projected that the EPF dividend for 2020 could remain the same or slightly lower due to the i-Lestari and i-Sinar facilities.

Meanwhile, another source told TMR speculations are rife that EPF will deliver a “better than expected” performance.

“PNB’s income distribution is really low at 4.25%. It is likely for EPF to post between 5% and 6%,” another source added, saying this performance would be unprecedented for both funds.

One of the reasons, the source said, would mostly depend on EPF gains from its investments.

“Another would be the nature of its investment portfolio, I believe that’s where they made their gains, despite the pandemic,” the person who requested anonymity added.

Normally, the fund would announce its dividend payout in the first quarter, but sources also said it could be slightly delayed due to several factors, such as i-Sinar’s distribution.


Read our earlier report

Lower EPF dividend expected due to weak equities

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Dividend payout: EPF may do better than ASB