One of the most stable industries in Singapore is our banking industry.
In particular, our local banks have demonstrated an enviable track record of sustaining profitability over a long period of time. As such, these banks have become popular among conservative investors who want to generate stable returns over the long term, both in the form of dividends and capital appreciation.
But for dividend investors looking to invest in bank stocks, which local bank is a better dividend stock to buy now? Here, I’ll compare DBS Group Holdings Ltd (SGX: D05) and United Overseas Bank Ltd (SGX: U11).
The idea is to get a quick overview of which bank might be a better buy now for dividend investors.
Disclaimer: This is not a sponsored post. Opinions expressed in the article by the author should not be taken as investment advice. Please do your own research and due diligence.
Financial Track Record
To start with, we will compare the financial performance of both banks in the last decade.
This will help us assess the sustainability of the banks’ performance in the future.
Also, we can find out which bank did better, financially, in the last decade. With that, let’s look at some numbers for both banks.
Again, we will start with DBS Group.
From 2008 to 2018, DBS’s total income grew from S$6.0 billion in 2008 to S$13.2 billion in 2018. Similarly, net profit attributable to shareholders grew from S$1.9 billion in 2008 to S$5.6 billion in 2018. The former was up by 120% while the latter was up by 194% during that period.
And now UOB.
During the same period, its total income grew from S$5.3 billion in 2008 to S$9.1 billion in 2018.
Similarly, net profit attributable to shareholders grew from S$1.9 billion in 2008 to S$4.0 billion in 2018.
The former was up by 72% while the latter was up by 111% during that period.
Both banks did well in growing their business in the last decade. Comparatively, DBS Group did better in growing its business, financially.
Winner: DBS Group
Dividend Track Record
The next comparison that we have here is to compare the dividend track record of the banks for the last 10 years. This will give us some indication of what we should expect in the future.
Let’s begin with DBS Group.
In the last decade, DBS Group has grown its dividend per share from S$0.65 in 2008 to S$1.20 in 2018. In other words, its dividend was up by 85% during the period.
And now for UOB, it has grown its dividend per share from S$0.60 in 2008 to S$1.20 in 2018. In other words, its dividend was up by 100% during the period.
As we can see, both banks have done reasonably well by sustaining, as well as growing their dividends over the decade. Among the two, UOB did better in growing its dividend during that period.
Overall, it’s a tie here.
From the above analysis, we can conclude that both banks have demonstrated stable financial and dividend track records, which render both of them worthy for dividend investors’ consideration.
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