Singapore Telecommunications (SGX:Z74) Approved A Higher Dividend, Is The Valuation Still Undervalued?

Dividend increase and final payout structure

Singapore Telecommunications (SGX:Z74) moved into focus after shareholders approved a higher total dividend for FY2026, including a final payout split between core and value realisation components at the 29 July 2026 AGM.

The board declared a final dividend of 10.3 cents per share for the year ended 31 March 2026, made up of a 7.0 cent core dividend and a 3.3 cent value realisation dividend.

Management reported that total FY2026 dividends were 9% higher year on year, with the full-year payout comprising a 13.4 cent core dividend and a 5.1 cent value realisation dividend.

Based on Singapore Telecommunications' share price on 28 July 2026, the company said the FY2026 dividend implied a yield of about 4.1%, which may be of interest to income-focused investors.

At a share price of SGD4.54, Singapore Telecommunications has seen a 90 day share price return of 4.61%, while the year to date share price return is slightly down 0.87%. However, the 1 year total shareholder return of 9.10% and the very large 3 and 5 year total shareholder returns suggest that longer term holders have been rewarded, and recent dividend news appears to have supported improving momentum in recent months.

Spot opportunities beyond Singapore Telecommunications by scanning a hand-picked 413 dividend fortresses that may appeal if this higher payout profile is on your radar.

The recent move in Singapore Telecommunications brings a clear tension into view. Is the higher price mainly recognition of a steadier business and dividend profile, or has sentiment simply swung too far ahead of fundamentals as they stand today?

Preferred P/E multiple for Singapore Telecommunications: Is it justified?

Singapore Telecommunications last closed at SGD4.54 and is trading on a P/E of 20.9x, which screens as expensive relative to both its Asian telecom peers and the broader peer set, even though internal estimates suggest this level is below a modelled fair P/E.

The P/E ratio compares the current share price with earnings per share and is a common way investors frame what they are paying for each dollar of profit. For a telecom group like Singapore Telecommunications, which combines mature connectivity businesses with growth initiatives in digital infrastructure and services, this metric helps investors judge whether the market price lines up with current profitability.

At 20.9x earnings, Singapore Telecommunications trades above the Asian telecom industry average P/E of 16.4x and above the peer average of 13.6x. This points to a premium that the market is currently assigning to its profile. However, Simply Wall St estimates a fair P/E of 26.7x for the company, which implies the present market multiple is below a level that the fair ratio model indicates the market could move toward over time if assumptions hold.

Explore the SWS fair ratio for Singapore Telecommunications.

Result: Price-to-Earnings of 20.9x (ABOUT RIGHT)

However, Singapore Telecommunications still faces risks such as pressure on margins across its Optus and Singapore operations, as well as potential execution challenges in NCS and Digital InfraCo.

Find out about the key risks to this Singapore Telecommunications narrative.

Another view on Singapore Telecommunications valuation

The P/E premium around Singapore Telecommunications looks less straightforward once the SWS DCF model is brought in. That model indicates a fair value of SGD6.98 per share versus the current SGD4.54, which points to the stock trading at a discount. If the cash flow view is right, how reliable is the earnings-based signal?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Singapore Telecommunications for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 262 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With Singapore Telecommunications showing a mix of supportive signals and open questions, it makes sense to move quickly and test the numbers for yourself. To weigh both the upside potential and the issues that could hold the stock back, start by reviewing the 2 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Singapore Telecommunications?

If Singapore Telecommunications has your attention today, do not stop there. Use the Simply Wall St Screener to find other opportunities that could fit your goals.

• Scan for resilient balance sheets and steady fundamentals by checking the list of solid balance sheet and fundamentals (433 results) to focus on financial strength first.
• Look for potentially mispriced opportunities by reviewing the 262 high quality undervalued stocks before the market fully pays attention.
• Target income ideas with staying power by comparing the 413 dividend fortresses that might suit a portfolio built around regular cash returns.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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