2 Businesses That Have Grown Their Dividends For 5 Consecutive Years
Investors naturally gravitate towards businesses that grow their dividends over time, as this is an indication that the business is performing well.
Investors enjoy a healthy and growing stream of income from such companies, while the share price usually trends steadily upward, too, thanks to the growth of the underlying business.
However, due to the nature of business cycles, it may be tough to find companies that have been consistent in growing their total annual dividends. Businesses able to do this demonstrate sustained and steady growth and definitely deserve a place in an investor’s portfolio.
Here are two businesses that have managed to grow their annual dividends over five consecutive years, a rare feat indeed in a world full of competitive threats and macroeconomic headwinds.
Disclaimer: This is not a sponsored post. Opinions expressed in the article should not be taken as investment advice. Please do your own due diligence.
1. Mapletree Commercial Trust
Mapletree Commercial Trust (SGX: N21U) is a Singapore-focused REIT that invests in income-producing real estate used primarily for office and/or retail purposes.
MCT’s portfolio consists of five properties:
- VivoCity
- Mapletree Business City I
- PSA Building
- Mapletree Anson, and
- Bank of America Merril Lynch Harbourfront
The portfolio has a total net lettable area of 3.9 million square feet with a total value of around S$7 billion.
| Fiscal Year (ended 31 Mar) | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
|---|---|---|---|---|---|---|
| First Quarter - SGD Cents | 1.753 | 1.95 | 2.01 | 2.03 | 2.23 | 2.23 |
| Second Quarter - SGD Cents | 1.801 | 1.97 | 2.02 | 2.05 | 2.24 | 2.27 |
| Third Quarter - SGD Cents | 1.865 | 2.08 | 2.08 | 2.28 | 2.30 | 2.33 |
| Fourth Quarter - SGD Cents | 1.953 | 2.00 | 2.02 | 2.26 | 2.27 | 2.31 |
| Total Dividend Per Share - SGD Cents | 7.372 | 8.00 | 8.13 | 8.62 | 9.04 | 9.14 |
Source: Mapletree Commercial Trust Annual Reports 2014 – 2019
MCT has managed to grow its distribution per unit (DPU) every single fiscal year for five consecutive years.
For FY 2014, annual DPU was 7.372 Singapore cents, but this has grown by 24% to 9.14 Singapore cents by FY 2019.
For MCT’s latest Q1 2020 earnings, DPU grew by 3.6% year on year, from 2.23 Singapore cents to 2.31 Singapore cents.
At MCT’s last traded price of S$2.29, the REIT’s trailing-12-month dividend yield stands at 4.0%.
2. SATS Ltd
SATS Ltd (SGX: S58) is a leading provider of food solutions and gateway services.
The food solutions division includes airline catering and central kitchens for foodservice chains, restaurants, and institutions. Gateway services comprise airfreight handling, passenger services, and baggage handling.
| Fiscal Year (ended 31 Mar) | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
|---|---|---|---|---|---|---|
| Interim Dividend Per Share - SGD Cents | 5.0 | 5.0 | 5.0 | 6.0 | 6.0 | 6.0 |
| Final Dividend Per Share - SGD Cents | 8.0 | 9.0 | 10.0 | 11.0 | 12.0 | 13.0 |
| Total Dividend Per Share - SGD Cents | 13.0 | 14.0 | 15.0 | 17.0 | 18.0 | 19.0 |
Source: SATS Limited Annual Reports 2014 – 2019
SATS has demonstrated a superb track record of growing its annual dividend every year for five consecutive years.
From S$0.13 back in FY 2014, SATS is now paying out an annual dividend of S$0.19 in its most recent fiscal year (FY 2019). This steady but sustained increase shows management’s commitment to rewarding shareholders for the growth in the underlying business.
On its recent Capital Markets Day, SATS announced its intention to accelerate its capital expenditure (capex) over the next three years, earmarking S$1 billion for acquisitions to bolster its capabilities and grow market share.
Investors should note that with the planned increase in capex, there is no guarantee dividends can continue their upward trajectory as they had done for the past five years. However, I believe management will try to keep the annual dividend constant, at least, as the group has been consistently generating very healthy levels of free cash flow.
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