Options puppy analysis Why I bought SIA at 6.70 and taking 5% of dividend yearly SGD 688 Cash Vouchers* up for grabs
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Why I Bought Singapore Airlines at $6.70 — A 5% Dividend with Structural Travel Demand
When I bought Singapore Airlines (SIA) at S$6.70, many people asked me whether I was chasing yield or trying to time a rebound. My answer is simple: I am buying a high-quality national carrier at a reasonable price, with a solid dividend yield, supported by structural travel demand.
At S$6.70 and with a dividend of around S$0.335 per share, the yield comes up to approximately 5%. In Singapore’s current investment landscape, a 5% yield from a globally respected airline backed by strong fundamentals is not something I ignore easily. It is not a speculative penny stock. It is a flagship company representing the country.
A 5% Yield in Today’s Context
Let’s put things into perspective. Fixed deposits in Singapore offer around 3–4%. CPF Ordinary Account gives 2.5%. Even many blue-chip REITs are yielding between 4–6% but carry interest rate sensitivity risks.
SIA offering around 5% means I am getting compensated while holding the stock. This is important because airlines are cyclical. If I am going to ride through volatility, I want to be paid while waiting.
The dividend of S$0.335 may not be guaranteed forever, but it reflects strong recent profitability. SIA has rebuilt itself post-pandemic with discipline. It raised capital when necessary, cleaned up its balance sheet, and is now operating from a position of strength.
Structural Travel Demand Is Real
Some argue that travel demand will slow. But when I observe the behavior of Gen Z, Millennials, and even Gen X, I see a different pattern. The younger generation prioritizes experiences over ownership. They may delay buying property or cars, but they will not delay travel.
Airports remain crowded. Flights are full. Premium cabins are still booked. This is no longer just “revenge travel” after COVID. It has become structural demand.
Singapore is also uniquely positioned. Changi Airport is a major global hub connecting Asia to Europe, Australia, and the United States. SIA benefits directly from this network effect. It is not just a point-to-point carrier; it is a premium transit airline.
As long as global mobility continues — business travel, tourism, family visits, education migration — SIA remains relevant.
Buying at $6.70 — Not Expensive, Not Cheap, But Fair
I am not claiming S$6.70 is the absolute bottom. Investing is not about catching the lowest tick. It is about buying value at a reasonable price.
Historically, SIA trades around 1.0–1.4 times book value depending on the cycle. At S$6.70, valuation is not stretched. It reflects moderation in earnings expectations, which actually gives margin of safety.
Oil prices have stabilized compared to previous spikes. Load factors remain healthy. Ticket prices, while not at peak revenge levels, are still sustainable. Cargo revenue has normalized but remains a supporting segment.
If earnings moderate but remain profitable, a 5% dividend is sustainable. And if there is any upside surprise in travel demand or fuel cost moderation, capital appreciation can follow.
Strong Balance Sheet Matters
One major difference between SIA today and airlines in past crises is balance sheet resilience.
During COVID, SIA raised significant capital. It was painful for shareholders at that time, but it strengthened the company. Today, SIA operates with a strong liquidity position. That reduces bankruptcy risk — something airline investors historically fear.
When I invest in a cyclical company, I want survivability. I want a company that can withstand shocks. SIA, as a national carrier with government-linked support and prudent management, gives me that confidence.
Comparing Alternatives
If I want pure dividend safety, I could buy Singapore banks. If I want yield stability, I could buy REITs. But SIA offers something slightly different — exposure to global travel recovery with income attached.
Banks depend heavily on interest rate cycles. REITs depend on property valuations and financing costs. SIA depends on travel demand and fuel cost.
Diversification across sectors makes sense. Adding SIA at 5% yield gives me exposure to a different economic driver.
Understanding the Risks
I am not blind to the risks.
Oil prices could spike due to geopolitical tensions. A global recession could reduce discretionary travel. Competition from Middle Eastern carriers and regional airlines remains intense. Yield compression could happen if airlines start discounting aggressively.
Dividends are not guaranteed. Airlines have suspended dividends before.
But investing is about weighing risk versus reward. At S$6.70, I believe the downside is manageable relative to the income and potential upside.
My Strategy Going Forward
I am not treating SIA as a short-term trade. If the price rises significantly and yield compresses too much, I may reassess. If the price drops but fundamentals remain intact, I may add more.
The key is discipline. I am buying based on:
1. Reasonable valuation
2. Attractive dividend yield
3. Structural travel demand
4. Strong balance sheet
5. National carrier advantage
As long as these pillars remain intact, my thesis holds.
Final Thoughts
Markets fluctuate daily. Headlines change weekly. But long-term investing requires conviction grounded in fundamentals.
Buying Singapore Airlines at S$6.70 with a 5% yield is not about hype. It is about recognizing that global mobility is here to stay. People will continue to fly — for business, for leisure, for family, for opportunity.
Gen Z may not care about traditional wealth markers, but they care about experiences. And experiences often begin with a flight.
If I can collect a 5% yield while participating in that long-term travel theme, I consider that a calculated and rational investment decision.
Time will determine the outcome, but at this price and yield, I am comfortable with my position.
@MillionaireTiger @Esther_Ryan @MillionaireTiger @TigerStars @Esther_Ryan @Daily_Discussion @TigerEvents
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