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Dividend investors favour companies that increase their dividends on a consistent basis. On that note, let’s look at two blue-chip companies of the Straits Times Index (SGX: ^STI) that have increased their dividends for the 2018 financial year.
Blue-chip #1: Comfort DelGro
ComfortDelGro Corporation Ltd (SGX: C52) is the first company to be featured. ComfortDelGro is one of the largest land transport companies in the world with operations in several countries, including Singapore.
In 2018, the company raised its total dividend by around 1% to S$0.105 per share, up from S$0.104 per share one year back. The 2018 dividend represents a payout ratio of 0.75.
ComfortDelGro’s dividend increase came on the back of its revenue for the year growing by 6.4% year-on-year to S$3.81 billion while its net profit inched up by 0.6% to S$303.3 million.
Looking ahead, the company said that revenue from its taxi business is “expected to be maintained amidst the keener competitive environment”. ComfortDelGro’s taxi business has been hit in recent times by the proliferation of ride-hailing apps.
At ComfortDelGro’s closing share price of S$2.45 yesterday, it had a trailing price-to-earnings ratio of around 18 and a trailing dividend yield of 4.3%.
Blue-chip #2: DBS Group
The second company is Singapore’s largest bank DBS Group Holdings Ltd (SGX: D05).
DBS increased its total dividend from S$0.93 per share in 2017 (excluding the special dividend of S$0.50 for the bank’s 50thanniversary and a one-time return of capital buffer) to S$1.20 per share in 2018. The latest dividend represents a growth of 29% year-on-year, and a dividend payout ratio of 0.56.
In 2018, DBS’ total income increased by 11% to a record S$13.18 billion while net profit surged 28% to a new high of S$5.63 billion. Return on equity (ROE) rose from 9.7% to 12.1%, the highest in more than 10 years.
The bank expects a high single-digit income growth in 2019 and its ROE to show further improvement.
DBS’ share price closed at S$25.18 yesterday. At that price, it had a price-to-book ratio of 1.4 and a trailing dividend yield of 4.8%.
Blue-chip #3: HongKong Land Holdings
Property developer and investor, Hongkong Land Holdings Limited (SGX: H78), is the third company to be featured. Currently, the company owns and manages more than 850,000 square metres of real estate across Asia. Hongkong Land has two business segments, namely, investment properties and development properties.
Hongkong Land raised its total dividend for 2018 by 10% to US$0.22 per share, up from US$0.20 a year back. In terms of underlying earnings per share, the 2018 dividend gives a payout ratio of 0.50.
For the financial year ended 31 December 2018, the property giant grew its revenue by 65% to US$2.67 billion mainly due to higher sales of properties. Meanwhile, underlying net profit (excluding one-off trading items) went up 9% to US$1.04 billion. Including non-trading items such as fair value gains on revaluation of investment properties, net profit fell 56% to US$2.46 billion.
Hongkong Land shares ended Friday, 1 March, at US$7.33 apiece. At that price, it had a price-to-book (PB) ratio of 0.45 and a trailing dividend yield of 3%.
Blue-chip #4: OCBC Bank
The fourth blue-chip share on the list is Oversea-Chinese Banking Corp Limited (SGX: O39), or OCBC for short. OCBC is another major bank in Singapore, together with DBS.
In 2018, OCBC increased its total dividend to S$0.43 per share, up 16% year-on-year from S$0.37 in 2017. The 2018 dividend gives a payout ratio of 0.41.
The dividend growth in 2018 was due to record earnings and a robust capital position. For the year, OCBC’s total income grew 2% year-on-year to S$9.70 billion while net profit hit a record of S$4.49 billion, climbing 11% year-on-year.
At OCBC’s closing share price of S$11.10 on 1 March, it had a PB ratio of 1.2 and a trailing dividend yield of 3.9%.
Blue-chip #5: UOB Bank
Rounding off the list of blue-chips is the third and final Singapore-listed bank, United Overseas Bank Ltd (SGX: U11), or UOB for short.
UOB raised its total dividend for 2018 by 20% to S$1.20 per share, up from S$1.00 per share in 2017 (the dividends in both years include a special dividend of S$0.20 per share in each year). The 2018 dividend gives a payout ratio of 0.52, including special dividend, and 0.43 excluding special dividend.
For the financial year ended 31 December 2018, UOB’s total income improved 6% to S$9.12 billion and net profit climbed 18% to S$4.01 billion.
UOB’s share price closed at S$25.00 on 1 March. At that price, it had a PB ratio of 1.2 and a trailing dividend yield of 4.8% (including special dividend; yield of 4% excluding special dividend).
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