Thailand’s equity market may be entering a familiar seasonal soft patch, but analysts view the typical weakness in May as a tactical buying opportunity—particularly for income-focused investors targeting resilient dividend stocks.
Research from Bualuang Securities indicates that dividend yield is playing an increasingly important role in driving total returns on the Stock Exchange of Thailand, especially as earnings growth remains subdued. At the same time, dividends are helping cushion portfolios against downside volatility.
This seasonal pattern is being reframed from the traditional “sell in May” narrative to a more constructive “buy on weakness” strategy, according to Piriyapon Kongvanich, head of equity research at BLS.
Historical data from 2014 to 2025 shows the SET Index declining by an average of 1% in May, with a probability of around 60%. The SETHD Index, which tracks dividend-paying stocks, has performed slightly worse, posting an average drop of 1.3% with a 70% likelihood of decline.
Banking stocks—typically core dividend plays—tend to weaken earlier due to post-ex-dividend selling pressure. The sector has historically fallen by 2.8% in April before declining a further 0.8% in May, with a high probability of continued softness. However, these movements are largely driven by technical factors rather than deteriorating fundamentals, with recoveries usually emerging between July and August.
Over the past three years, market dynamics have shifted, with high-dividend stocks outperforming the broader market by approximately 1.5 times while experiencing smaller drawdowns. This trend suggests investors are increasingly favouring income-generating assets, as elevated yields help absorb downside risks and support faster price recoveries.
As a result, May’s seasonal weakness is increasingly viewed as a “window of accumulation” rather than a signal to reduce exposure.
Valuation support
From a valuation perspective, Thailand’s dividend yield for 2026 is projected at 3.8%—above its long-term average by one standard deviation and close to levels seen during the pandemic. The yield gap versus the 10-year government bond yield of 2.1% remains attractive at approximately 1.7%, reinforcing the relative value of dividend equities compared with fixed income.
Stocks offering yields well above historical averages include Krungthai Bank (6.7%), Kasikornbank (6.3%), Com7(5.2%), Bangkok Dusit Medical Services (4.3%), and Central Pattana (4.2%).
Other notable high-yield names include SCB X (8%), PTT (6.0%), and Thai Life Insurance (5.7%), supported by strong cash flow visibility and resilient payout capacity.
Dividend resilience
BLS also conducted stress tests to assess dividend sustainability under adverse scenarios across sectors. These assumptions included rising credit costs for banks, weaker retail sales, declining mall rental income, softer oil and gas volumes, slower telecom revenue growth, reduced healthcare demand, margin pressure in utilities, and weaker land sales in industrial estates.
Even under these conditions, projected dividend yields for 2026 remain elevated in the range of 4% to 7.6%, only slightly below base-case estimates of 4.1% to 8%.
Banking stocks continue to stand out for their resilience. In a worst-case scenario, SCB is projected to yield 7.6% (versus 8% in the base case), KTB 6.4% (6.7%), KBANK 6% (6.3%), and Bangkok Bank 6.2% (6.5%).
Defensive sectors also show limited downside, including Advanced Info Service (4.5% versus 4.7%), BDMS (4.1% versus 4.3%), and CPN (4.0% versus 4.2%). PTT maintains a stable yield of around 6% even under stress, supported by its diversified income base.
“The findings reinforce a clear investment narrative: in a low-growth environment, dividend yield is becoming a key buffer and a primary source of returns,” said Mr Piriyapon.
With valuations still supportive and payout resilience intact, accumulating high-quality dividend stocks during May’s seasonal weakness could offer investors a compelling path to steady income and long-term returns.