Why I Sold OCBC and VICOM for UMS, Venture and…

In my previous article, I shared that the dividend growth in the second half of the year is likely to slow. This is a deliberate trade-off as I further trimmed OCBC (O39) and fully divested VICOM (WJP).

While these proceeds were partially funnelled into UMS (558) and Venture (V03), the shift from high-yield “cash cows” to semiconductor cyclical plays means my immediate dividend income won’t fully offset the drop.

Here is the strategic thinking behind this rotation.

OCBC: Taking Profits When the Upside is Capped

The three major Singapore banks DBS (D05), OCBC and UOB (U11) have benefitted from the surge in interest rates over the past few years. While rates have declined and stabilised, they have shown resilience with increased deposits and growth in income fees.

I have no doubt that they will continue to do well and stand a good chance to maintain their ordinary dividends. However, my sense is the “easy money” has been made.

At my selling price of S$21.6, OCBC offers a trailing yield of ~4.6% (including the special dividend). If there’s no further share buybacks from the capital return budget, this year should offer similar special dividend and yield.

However, if you stripped off the special dividend, you will be looking at yield of less than 4% from FY 2027 onwards. Moreover, with the stock already up ~10% this year, the risk-to-reward ratio for further upside feels thin.

I’m not abandoning the sector—DBS and OCBC remain in my top 10 holdings. But by taking some chips off the table now, I can fund opportunities with much higher ceilings.

VICOM: A Transition Year Ahead?

In my February post, I have opined that VICOM might be able to sustain its record S$0.084 dividend per share this year. That is despite the expected lower demand for its testing services and tapering off of On-Board Units (OBU) installations.

My thesis was simple: even with lower EPS, a return to a 90% payout ratio (now that Jalan Papan’s heavy capex is behind them) would keep the dividend steady.

After attending the AGM 2026 virtually a fortnight ago, my outlook has turned more cautious.

Don’t get me wrong.

The long-term roadmap for VICOM remains exciting with new opportunities emerging:

• Jalan Papan: It is becoming a hub for high-value testing including battery inspections. Additional savings and revenues will also be obtained from its on-site dormitory and largest electric charging farm for buses and heavy vehicles.
  
• Malaysia Expansion: The new JV in Penang is a great strategic move to diversify into electronics testing and a new geographical segment.

However, it will take time for these developments to contribute meaningfully, especially to the bottom lines.

CEO Sim Wing Yew acknowledged in response to shareholders’ queries regarding non-vehicle testing margins: costs are rising while pricing power is under pressure.

FY 2026 looks like a transition year, with lower EPS and payout unlikely to revert to 90%.

With the stock offering limited capital upside, I decided to exit my stake for a clean 20% gain.

Riding the Semiconductor Cycle: Added UMS and Venture

I didn’t sell because these businesses are “bad”; I sold to raise funds for the semiconductor upcycle. Attending various AGMs this year confirmed a recurring theme: real demand is back.

I’ve discussed UMS extensively just last week, but Venture’s 1Q 2026 update (fresh off the press last evening) provides the perfect illustration of why I’m shifting my weight here.

At first glance, a 1.9% revenue growth and 0.9% EPS creep-up is yawn-inducing. But the “real” story is hidden in the details:

• Currency Headwinds: At constant currency, revenue actually grew 8.2% YOY.
  
• A Tale of Two Portfolios: While “Lifestyle” remains soft (down 12.4% YOY), Portfolio B (Semiconductors) surged 11.2% YOY to S$417 million.

What attracted me most though it its outlook statement.

We expect these green shoots to grow in 2026.

From a management team that is usually more reserved, this is uncharacteristically direct and that’s a loud signal to me.

Food Empire: Bought the “Oversized” Drop

As I’ve shared previously, I have been looking to accumulate a larger stake in Food Empire (F03). My original plan was to wait and digest the 1Q 2026 business update before acting.

However, the market handed me an opportunity that forced my hand.

After going Ex-Dividend on 4 May with a total payout of S$0.09, the stock surprisingly held its ground and even rose on the day.

But the “gravity” of the broader market caught up on 5 May. Its price slumped by nearly 10% from its previous day’s closing of S$3.27.

To me, this felt like an overextended sell-off and provided a good entry point to increase my stake for its long-term growth story.

With this move, I have one final tranche left. I’ll keep that “dry powder” tucked away for the formal 1Q 2026 business update—but for now, I’m happy to have acted on the market’s mood swing.

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