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

26 Aug 2021

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.

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 Dividend	Amount Per Share (Singapore Cents)
1st quarter	33
2nd quarter	18
3rd quarter	18
4th quarter	18
Total dividend	87

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 Year	Dividend Period	Dividend Per Share (Singapore Cents)	Total Dividend for the Year (Excluding Special Dividend)	5-Year Compound Annual Growth Rate (CAGR)
2001	First-half (1H) interim dividend	12	26	17.2%
2001	Final dividend	14	26
2002	1H interim dividend	12	26
2002	Final dividend	14	26
2003	1H interim dividend	12	26
2003	Final dividend	14	26
2004	1H interim dividend	15	34
2004	Final dividend	19	34
2005	First quarter (1Q) interim dividend	9	49
	2Q interim dividend	13
	3Q interim dividend	13
	Final dividend	14
2006	1Q interim dividend	14	59	-1.3%
	2Q interim dividend	14
	3Q interim dividend	14
	Final dividend	17
	Special dividend	4
2007	1Q interim dividend	17	68
	2Q interim dividend	17
	3Q interim dividend	17
	Final dividend	17
2008	1Q interim dividend	17	65
	2Q interim dividend	17
	3Q interim dividend	17
	Final dividend	14
2009	1Q interim dividend	14	56
	2Q interim dividend	14
	3Q interim dividend	14
	Final dividend	14
2010	1Q interim dividend	14	56
	2Q interim dividend	14
	Final dividend	28
2011	1H interim dividend	28	56	1.7%
2011	Final dividend	28	56
2012	1H interim dividend	28	56
2012	Final dividend	28	56
2013	1H interim dividend	28	58
2013	Final dividend	30	58
2014	1H interim dividend	28	58
2014	Final dividend	30	58
2015	1H interim dividend	30	60
2015	Final dividend	30	60
2016	1H interim dividend	30	60	9.7%
2016	Final dividend	30	60
2017	1H interim dividend	33	93
	Final dividend	60
	Special dividend	50
2018	1H interim dividend	60	120
2018	Final dividend	60	120
2019	1Q interim dividend	30	123
	2Q interim dividend	30
	3Q interim dividend	30
	Final dividend	33
2020	1Q interim dividend	33	87
	2Q interim dividend	18
	3Q interim dividend	18
	Final dividend	18
2021	1Q interim dividend	18	117 (projected)	N/A
	2Q interim dividend	33
	3Q interim dividend	33 (projected)
	Final dividend	33 (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:

	2016	2017	2018	2019	2020
Earnings Per Share (S$)	1.66	1.69	2.15	2.46	1.81
Dividend Per Share, Excluding Special Dividend (S$)	0.60	0.93	1.20	1.23	0.87
Dividend Payout Ratio	36.1%	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.

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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