Why I Sold a Small Part of My Singapore Technologies Engineering Shares

Over the past year, Singapore Technologies Engineering (STE) has had an incredible run.  Compared to just 12 months ago, the share price has risen by almost 100%.  That is a significant rally, especially for a traditionally defensive counter like this.  While I am glad to see one of my core dividend holdings performing so well, the sharp price appreciation has also changed the dynamics of the stock, particularly the yield, which has now been compressed to below 2.5%.  That is a little too low for my liking, especially considering my dividend investing goals.

STE has benefited from several positive tailwinds over the past year.  Its aerospace division recovered strongly with global air travel rebounding, and its defense and smart city solutions continued to see robust demand.  The company also announced multiple new contract wins, both locally and globally, which boosted investor confidence.  More importantly, to dividend investors like myself, STE intends to implement a new dividend policy for FY2026 onwards, where they will pay out approximately one-third of the year-on-year increase in net profit as incremental dividends, in addition to maintaining quarterly payouts.  Analysts have taken notice, and the market has priced in a fair bit of optimism into the stock.  Good news after good news, and the share price followed suit.

However, as a dividend investor, I am mindful of the overall yield that my portfolio generates.  When the price rises faster than earnings and dividends, the yield naturally falls.  At below 2.5%, I felt it was time to trim slightly, to let the cash work a little harder to churn better yield.  So I sold 10% of my existing holdings in STE, at various price targets along the way.  It is a small move, definitely not a wholesale exit, because I still believe in the long-term prospects of the company.  It is well-managed, has a strong balance sheet, and is still paying me dividends while I wait.

The proceeds from this small divestment did not sit idle.  I chose to reallocate the funds into two other dividend counters in my portfolio, namely HRNetGroup (HRNG) and ComfortDelgro (CDG), both of which are currently offering better yields.  HRNG, in particular, has been showing steady results with a strong cash position and consistent dividend payouts.  The reasons for my purchase is in this earlier post.  CDG, while not without challenges, is a recovery play with attractive yield potential as well.  This reallocation allows me to enhance my portfolio’s overall dividend yield while staying invested in companies I still believe in.  The reasons for my purchase is in this earlier post.

To be clear, I am still holding onto the majority of my STE shares.  I remain optimistic about its long-term growth story, especially with its continued pivot into smart technologies and international expansion.  The dividends, although compressed, are still coming in, and that adds to my passive income stream.  However if the share price continues to surge without a corresponding rise in earnings or dividend payouts, I may consider trimming further.  I will act accordingly, as always, based on market conditions and portfolio needs.

At the end of the day, it is about staying nimble and being aware of where my capital can work harder, without losing sight of quality and stability.  STE has done well for me, and I am happy to let the rest ride for now.  Barista FIRE, here I come...!