facebookYour Complete Guide to DBS Group Holdings Ltd's (SGX: D05) Dividends

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Your Complete Guide to DBS Group Holdings Ltd's (SGX: D05) Dividends

profileSudhan P

Singapore’s largest bank DBS Group Holdings Ltd (SGX: D05) is widely popular among dividend-hungry investors as it pays really chunky dividends.

Here, let’s dive into DBS’ dividend yield, dividend history, and more importantly…

… its dividend sustainability to understand if the bank can continue paying growing dividends.

Source: Giphy

DBS Dividend Yield

DBS shares closed at S$30.16 each on 25 August.

At that price, the bank’s trailing dividend yield stood at 2.9%.

For context, the SPDR STI ETF (SGX: ES3) had a lower distribution yield of 2.6% on the same day.

The SPDR STI ETF is an exchange-traded fund (ETF) that tracks the fundamentals of Singapore’s Straits Times Index (STI).

DBS is part of the STI and is its largest component at around 18%.

DBS Dividend Amount and Payout Periods

For its financial year ended 31 December 2020, DBS dished out a total dividend of 87 Singapore cents per share.

DBS is the only bank that pays a quarterly dividend currently. That means it declares a dividend every quarter (or three months) each year.

In 2020, DBS dished out 33 cents per share for its first quarter, and 18 cents each for the subsequent three quarters, totalling 87 cents as mentioned earlier.

2020 DBS DividendAmount Per Share (Singapore Cents)
1st quarter33
2nd quarter18
3rd quarter18
4th quarter18
Total dividend87

DBS Scrip Dividend Scheme

The DBS scrip dividend scheme provides shareholders with the option of receiving their dividends in the form of shares instead of cash.

The last time DBS offered a scrip dividend was for its 2021 first-quarter dividend.

For its 2021 second-quarter, DBS ceased the scrip dividend scheme.

DBS Dividend History 

The following table showcases DBS’ dividends from 2001 to 2021, broken down into payout periods:

DBS Dividend for YearDividend PeriodDividend Per Share (Singapore Cents)Total Dividend for the Year (Excluding Special Dividend)5-Year Compound Annual Growth Rate (CAGR)
2001First-half (1H) interim dividend122617.2%
Final dividend14
20021H interim dividend1226
Final dividend14
20031H interim dividend1226
Final dividend14
20041H interim dividend1534
Final dividend19
2005First quarter (1Q) interim dividend949
2Q interim dividend13
3Q interim dividend13
Final dividend14
20061Q interim dividend1459-1.3%
2Q interim dividend14
3Q interim dividend14
Final dividend17
Special dividend4
20071Q interim dividend1768
2Q interim dividend17
3Q interim dividend17
Final dividend17
20081Q interim dividend1765
2Q interim dividend17
3Q interim dividend17
Final dividend14
20091Q interim dividend1456
2Q interim dividend14
3Q interim dividend14
Final dividend14
20101Q interim dividend1456
2Q interim dividend14
Final dividend28
20111H interim dividend28561.7%
Final dividend28
20121H interim dividend2856
Final dividend28
20131H interim dividend2858
Final dividend30
20141H interim dividend2858
Final dividend30
20151H interim dividend3060
Final dividend30
20161H interim dividend30609.7%
Final dividend30
20171H interim dividend3393
Final dividend60
Special dividend50
20181H interim dividend60120
Final dividend60
20191Q interim dividend30123
2Q interim dividend30
3Q interim dividend30
Final dividend33
20201Q interim dividend3387
2Q interim dividend18
3Q interim dividend18
Final dividend18
20211Q interim dividend18117
(projected)
N/A
2Q interim dividend33
3Q interim dividend33
(projected)
Final dividend33
(projected)

(Note: Total yearly dividend has been adjusted for the rights issue announced in December 2008.)

Overall, we can see that DBS has been paying increasing dividends, less any unforeseen circumstances such as 2007-2009 global financial crisis and the coronavirus-driven economic slowdown in 2020.

In July 2020, DBS and the other local banks had to curb their dividend payout after the Monetary Authority of Singapore (MAS) called on the financial institutions to cap their total dividends per share for 2020 at 60% of 2019’s dividends.

If not for the cap, DBS could have paid out a total dividend of 132 cents per share for 2020 (or 33 cents each quarter).

That would bring its five-year dividend CAGR from 2016 to 2020 to around 22%, the highest five-year annualised growth rate over the past 20 years.

The MAS dividend cap was lifted in July this year, and DBS has resumed its dividend payout of 33 cents per share for its 2021 second-quarter.

For DBS’ third and fourth quarters of 2021, the bank is likely to pay 66 cents per share in all (or 33 cents per share each quarter).

That could bring the total dividend per share for 2021 to 117 cents.

DBS Dividend Policy

DBS has a dividend policy of paying “sustainable dividends that grow progressively with earnings”.

But it doesn’t have a specific dividend payout ratio, unlike some other listed companies.

DBS Dividend Sustainability

The dividend payout ratio gives investors clues about a company’s dividend sustainability.

The dividend sustainability of a company is more important than its dividend yield as the yield is about the past while the sustainability portion revolves around the future.

Companies that pay less than 100% of their earnings leave some room for dividend increases in the future, even if their earnings were to stall.

As for DBS, here’s a table showing its dividend payout ratios from 2016 to 2020:

 20162017201820192020
Earnings Per Share (S$)1.661.692.152.461.81
Dividend Per Share, Excluding Special Dividend (S$)0.600.931.201.230.87
Dividend Payout Ratio36.1%55.0%55.8%50.0%48.1%

We can see that DBS has paid out below 60% of its earnings as dividends over the last five years.

This shows that the bank’s dividends are well-covered by its earnings and that they are sustainable.

As long as the bank continues growing its earnings, its current dividends will become “safer”, giving ample room for dividend increase over time.

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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer doesn’t own shares in any companies mentioned. 

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About Sudhan P
It isn't fair competition when only one company in the world makes Monopoly. But I love investing in monopolies. Before joining the Seedly hood, I had the chance to co-author a Singapore-themed investment book – "Invest Lah! The Average Joe's Guide To Investing" – and work at The Motley Fool Singapore as an analyst.
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