EPF Predicted to Pay Out Higher Dividends Than ASB
Are You Hiring?
Find candidates in 72 Hours with 5+ million talents in Maukerja Malaysia & Ricebowl using Job Ads.
Hire Now
The Employees Provident Fund (EPF) is anticipated to pay a higher dividend than Permodalan Nasional Bhd's Amanah Saham Bumiputera (ASB).
PNB recently said that ASB unitholders would receive a total distribution of five sen per unit, consisting of a 4.25 sen distribution and a 0.75 sen bonus for the financial year ending 31 December 2021.
Higher dividend payout
According to Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff, EPF will be able to declare a higher dividend payout like PNB for 2021 since it has a larger asset worth nearly RM1 trillion.
He also stated that EPF has better exposure to overseas stock investments than PNB, which always provides a higher yearly return on investment than local equities. The FTSE Bursa Malaysia KLCI has so far reported a -7.8% growth in 2021.
.jpg)
Ahmed Razman believes EPF's dividends in 2021 will be greater than PNB's, albeit not by much.
He said that with the exception of last year's dividend, EPF's dividend is typically smaller than PNB's. He predicted the EPF dividends for 2021 to be about 5.2% for Conventional Savings and 4.9%t to 5.2% for Shariah Savings, making it two years in a row that its dividends will be higher than PNB's.
As of 3 November 2021, a total of RM20.8 billion had been disbursed via i-Lestari, and RM58.8 billion had been disbursed under i-Sinar. The total amount withdrawn will be RM101 billion, in addition to the RM21.5 billion granted under i-Citra.
Ahmed Razman observed that the annual contribution is always on the upper side each year. In 2021, the annual contribution will most likely exceed RM80 billion, with a surplus of roughly RM25 billion to RM30 billion.
Furthermore, he stated that there would be no significant applications for these three programmes following this. As a result, he concluded that there is enough surplus each year to ensure that the EPF dividend is not strained.
EPF's portfolio diversification approach
Similarly, Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Islam Malaysia Bhd, believes the EPF would be able to pay a decent dividend this year.
He stressed that EPF's portfolio diversification approach, which includes investments in worldwide markets, has positively impacted its portfolio returns.
He said it has helped to offset the lacklustre performance in domestic stocks.
Looking at the big picture, Afzanizam believes there should be no comparison between these two funds as their missions and purposes are very different. He noted that in totality, it does benefit when both funds do well this year, as it will help to increase the wealth of average Malaysians.
For 2020, the EPF declared dividends of 5.2% for Conventional Savings and 4.9% on Shariah Savings. EPF also declared dividends of 5.45% for Conventional Savings and 5% for Shariah Savings in 2019.
The highest dividend rates paid by EPF in the last 18 years were 6.9% in 2017 and 6.75% in 2014. The overall payout in 2017 was RM48.13 billion, a 29.8% increase from 2016.
The EPF earned RM34.05 billion in total investment income for the first half of the year ended 30 June 2021 (1H21), up RM6.79 billion, or 25%, compared to RM27.26 billion in 1H20.
The total gross investment income for the second quarter (2Q21) was RM14.77 billion, RM0.35 billion less than the RM15.12 billion recorded in the previous quarter.
Datuk Seri Amir Hamzah Azizan, CEO of EPF, recently stated that the fund delivered a resilient performance in 1H21, owing to the gradual recovery of equities markets and most asset classes amid the worldwide rebound.
He stated that the accelerated distribution of Covid-19 vaccines and the reopening of economies had contributed to superior performance for equities in developed markets.
Source: The Malaysian Reserve