With the Straits Times Index (SGX: ^STI) hovering near record highs, the big question hangs in the air: do you buy now and risk overpaying, or refrain from buying and risk missing the market’s rise?
A rising stock price does not automatically signal a bubble.
What actually matters is whether underlying earnings, dividends, and future growth justify the valuation.
Let’s look past the price charts and test three SGX heavyweights to see if today’s prices are genuinely overinflated or simply worth every dollar.
Before Calling a Stock “Expensive”, Check These 3 Things
Look at the price-to-earnings (P/E) ratio, price-to-book (P/B), and dividend yield before writing off a stock as too pricey.
Next, compare the stock’s share price against its five- or ten-year averages.
And one last thing: look forward, not just back.
If the company’s set for strong earnings and steady dividend growth, paying up today might make sense after all.
A S$50 stock can easily be cheaper than a S$5 stock if superior earnings power fully backs justified that price.
DBS Group Holdings (SGX: D05): The Stock That Looks Expensive for Good Reason
DBS has been on a remarkable run, with its share price trading near all-time highs – at S$75.84 as of 20 August 2026 – well above its 52-week low of S$49.70.
For the second quarter of 2026 (2Q2026), DBS reported a record net profit of S$3.08 billion, up 9% year-on-year (YoY), while total income crossed S$6 billion for the first time.
For the first half of 2026 (1H2026), DBS delivered a return on equity (ROE) of 17.5%, showing strong balance sheet efficiency despite shifting interest rates.
Higher earnings have fed straight into shareholder returns.
The board declared a S$0.66 ordinary dividend along with a S$0.15 capital return dividend, up from the S$0.60 per quarter paid through the first three quarters of FY2025.
That strength comes with a premium price tag – the biggest lender currently trades at a P/E ratio of 19.6x, alongside a trailing dividend yield of 4.2%.
Premium businesses deserve premium valuations, provided their earnings keep up.
Singtel (SGX: Z74): The Dividend Favourite
Singtel stands out as a go-to choice for income-focused investors, with its share price trading at S$4.45 (as of 20 August 2026), up 8.3% over the past year.
Investor interest is anchored by strong defensive earnings.
For 1Q2027, underlying net profit grew 21% YoY to S$831 million.
NCS, Optus, Digital InfraCo, and regional associates like Bharti Airtel and Advanced Info Service (AIS) played big roles in this growth.
Singtel raised its total FY2026 payout to S$0.185 per share, comprising S$0.134 in core dividends and S$0.051 in value realisation dividends, marking strong multi-year payout growth.
The core dividend represents an 80% payout of underlying net profit, in line with Singtel’s stated policy of 70% to 90%, while the value realisation dividend is funded by asset recycling and guided at S$0.03 to S$0.06 per share through FY2030.
Following the stock’s recent rally, Singtel trades at a P/E ratio of 21.1x, slightly above its historical mid-cycle averages, with a trailing dividend yield of 4.2%.
While the yield has narrowed as the share price has risen, the earnings behind it have continued to grow.
ST Engineering (SGX: S63): The Growth Stock at a Higher Multiple
ST Engineering has emerged as a premier industrial growth play, with its share price trading at S$10.85 as of 20 August 2026, far above its 52-week low of S$7.54.
For 1H2026, revenue rose 11% YoY to S$6.57 billion, while net profit jumped 27% to S$512 million.
The group secured S$7.6 billion in new contracts during 1H2026, pushing its order book to a record S$35.7 billion, providing multi-year revenue visibility through 2026 and beyond.
It also raised the 2Q2026 interim dividend to S$0.05 per share from S$0.04 a year ago.
On top of that, operating cash flows hit S$960 million.
But there’s a catch.
ST Engineering now trades at a forward P/E ratio of 31x, well above its historical average multiples.
At this valuation, the market doesn’t leave much room for error.
Any slip-up, whether tighter margins, a supply-chain hiccup or a project running behind, could spark a sharp correction in the stock price.
Buy Now or Wait for a Pullback?
Trying to time the perfect entry is tricky, so a better approach is often to buy in slowly with dollar-cost averaging.
By spreading your investments out over time, you ease into the market and avoid going all-in when prices might be high.
If you prefer to wait for a deal, decide in advance what counts as a good price or yield for you.
Then, hold on to your cash and stay patient until the market gives you that opportunity.
What Would Make These Stocks Truly Too Expensive?
Look out for valuations that shoot up way ahead of a company’s real earnings, dividend yields that drop below what you’d get from risk-free bonds, or growth forecasts that are too good to be true.
The biggest risk comes from paying top dollar now, betting on a future that doesn’t pan out, especially if the company’s basic performance starts to slip.
Overpaying for growth that does not show up is the quickest way to turn a supposedly reliable stock into an expensive regret.
Get Smart: Expensive Is Relative
Singapore blue chips may seem expensive compared to where they traded a few years ago, but evaluating a business on share price alone misses the point.
A company expanding its net profits and dividend payouts can comfortably justify new all-time highs while remaining solid value.
The critical question isn’t whether a stock has risen sharply, but what realistic return you can expect from today’s price.
That’s what separates overextended stocks from quality businesses built to compound.
It almost feels like the government is paying companies to make you wealthier. Singapore’s new S$5 billion market boost could send fresh money into local stocks. We identified 5 companies positioned to benefit, including familiar names with surprising wealth potential. Our free report reveals these hidden opportunities before the money flows in. Download it now before it’s too late.
Follow us on Facebook, Instagram, Telegram and YouTube for the latest investing news and analyses!
Disclosure: Joseph G. does not own shares of any companies mentioned.
