Is Keppel Infrastructure Trust (SGX:A7RU) a High-Yield Trap?

Keppel Infrastructure Trust (SGX:A7RU) has long captivated income-focused investors with its lofty dividend yield, currently hovering at 22.75% as of August 2025 [1]. However, beneath this alluring surface lies a complex interplay of earnings growth and dividend sustainability that raises critical questions: Is this yield a reward for resilience, or a trap for the unwary?

High Yield Attraction

The 22.75% yield, driven by a recent ex-dividend date on August 5, 2025, and a payout of S$0.02 per share [1], dwarfs the 9.01% yield cited by other sources [3]. Such volatility in yield metrics underscores the need to scrutinize the underlying fundamentals. While high yields often signal undervaluation or risk, they can also signal distress—particularly when earnings fail to support payout levels.

Dividend Trends: A Tale of Peaks and Valleys

Historical dividend data reveals a mixed narrative. Over the past five years, total dividends per share fluctuated between S$0.028 in 2020 and S$0.071 in 2023, the latter bolstered by a special distribution of S$0.0233 [1]. However, the 5-year average dividend growth rate is negative (-1.20%) [4], and the 3-year average plunges further to -7.80% [2]. This inconsistency suggests reliance on special distributions rather than organic growth.

The most recent 12 months, however, show a sharp rebound: a 22.20% growth in dividends per share [4]. Yet, this surge is juxtaposed with a staggering dividend payout ratio of 1.74 [4], meaning the trust is distributing more in dividends than it earns. Such a ratio is unsustainable in the long term, as it erodes retained earnings and reserves.

Earnings Growth: A Fragile Foundation

Keppel Infrastructure Trust’s earnings per share (EPS) have grown at an average annual rate of 20.6% over five years [6]. This appears robust, but closer inspection reveals uneven performance. For instance, the trust reported a loss of S$0.007 in 2020 and S$0.004 in 2022 [6], while the first half of 2025 saw a modest EPS of S$0.01 [6]. The 2024 full-year results also lagged expectations despite revenue outperforming forecasts [6].

This mismatch between revenue and EPS highlights operational inefficiencies. While revenue has grown at a 9.3% annualized rate [2], translating to a trailing twelve months (TTM) revenue of S$2.38 billion [5], the EPS growth has been inconsistent. A trust with volatile earnings cannot reliably support a high-yield strategy without risking a payout cut.

The Mismatch: A Recipe for Disappointment

The crux of the issue lies in the disconnect between dividend payouts and earnings. A payout ratio of 1.74 [4] implies that the trust is distributing 174% of its earnings to shareholders. This is not a sign of strength but of desperation—a reliance on accumulated reserves or debt to fund dividends. For example, the 2023 special distribution of S$0.0233 [1] likely drew from non-recurring gains or asset sales, not sustainable cash flows.

Investors must also consider the recent dividend history. The last payment of S$0.0096 per share occurred in February 2024 [1], and the subsequent S$0.02 payout in August 2025 suggests a sharp increase. Such volatility raises red flags: if earnings cannot cover these payouts, the trust may be forced to reduce dividends, triggering a sell-off and a vicious cycle of declining asset values.

Conclusion: Proceed with Caution

Keppel Infrastructure Trust’s 22.75% yield is a siren song for income seekers, but the underlying fundamentals tell a different story. The trust’s earnings growth, while positive, is inconsistent and insufficient to justify the current payout ratio. A payout ratio exceeding 100% is a clear warning sign, and the historical dividend trends—marked by negative growth and reliance on special distributions—further undermine confidence.

For investors, the lesson is clear: high yields must be backed by sustainable earnings. In Keppel Infrastructure Trust’s case, the mismatch between dividend payouts and earnings growth suggests a high-yield trap. While the trust may offer short-term income, the long-term risks of a payout cut or asset devaluation are significant.

Source:
[1] Keppel Infrastructure Trust. (KPLIF) Dividend 2025 [https://stockevents.app/en/stock/KPLIF/dividends]
[2] Keppel Infrastructure Trust Past Earnings Performance [https://simplywall.st/stocks/sg/materials/sgx-a7ru/keppel-infrastructure-trust-shares/past]
[3] Keppel Infrastructure (A7RU) Dividend Date & History [https://www.tipranks.com/stocks/sg:a7ru/dividends]
[4] Keppel Infrastructure Trust (SGX:A7RU) 5-Year Dividend Growth Rate [https://www.gurufocus.com/term/dividend_growth_5y/SGX:A7RU]
[5] Keppel Infrastructure Trust (A7RU.SI) - Yahoo Finance [https://finance.yahoo.com/quote/A7RU.SI/key-statistics/]
[6] Keppel Infrastructure Trust Past Earnings Performance [https://simplywall.st/stocks/sg/materials/sgx-a7ru/keppel-infrastructure-trust-shares/past]