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OCBC Dividend Guide Seedly

Oversea-Chinese Banking Corp Limited's (SGX: O39) Dividends: Everything You Should Know

profileSudhan P

Oversea-Chinese Banking Corp Limited (SGX: O39) is another popular dividend stock among Singapore investors.

Right now, let’s look into the Singapore bank’s dividend yield, dividend history, and more importantly…

… its dividend sustainability to understand if OCBC can continue dishing out increasing dividends.

Source: Giphy

OCBC Dividend Yield

The OCBC share price closed at S$11.61 apiece on 1 September.

At that stock price, the bank’s trailing dividend yield was 3.5%.

To put things into perspective, the SPDR STI ETF (SGX: ES3) had a lower distribution yield of around 2.7% on the same day.

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

OCBC is part of the STI and is its second-largest component at around 14%.

OCBC Dividend Amount and Payout Periods

For its financial year ended 31 December 2020, OCBC dished out a total dividend of 31.8 Singapore cents per share.

The bank’s annual dividend is usually split into two parts – one part (interim dividend) is given out for the second quarter and the other for the fourth quarter (final dividend).

Last year, OCBC paid out a dividend of 15.9 Singapore cents per share each for the second and fourth quarters.

In the 2021 second-quarter, OCBC paid out 25.0 Singapore cents per share after the Monetary Authority of Singapore (MAS) lifted the dividend cap for local banks and finance companies.

In July 2020, OCBC and the other banks had to curb their dividend payout after Singapore’s central bank called on the financial institutions to limit their total dividends per share for 2020 at 60% of 2019’s dividends as a pre-emptive measure.

OCBC Scrip Dividend Scheme

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

OCBC last offered a scrip dividend in the fourth quarter of 2020.

Here’s a look at all the periods that OCBC has offered scrip dividends:

YearDividend Type
2008Final dividend
2009Both interim and final dividend
2010Both interim and final dividend
2011Interim dividend
2013Final dividend
2014Both interim and final dividend
2015Both interim and final dividend
2018Both interim and final dividend
2019Interim dividend
2020Both interim and final dividend

OCBC Dividend History 

Now, let’s explore OCBC’s dividend payouts from 2008 to 2020:

OCBC Dividend for YearDividend PeriodDividend Per Share (Singapore Cents)Total Dividend Per Share (Singapore Cents)5-Year Compound Annual Growth Rate (CAGR)
2008Interim dividend14.028.04.2%
Final dividend14.0
2009Interim dividend14.028.0
Final dividend14.0
2010Interim dividend15.030.0
Final dividend15.0
2011Interim dividend15.030.0
Final dividend15.0
2012Interim dividend16.033.0
Final dividend17.0
2013Interim dividend17.034.02.14%
Final dividend17.0
2014Interim dividend18.036.0
Final dividend18.0
2015Interim dividend18.036.0
Final dividend18.0
2016Interim dividend18.036.0
Final dividend18.0
2017Interim dividend18.037.0
Final dividend19.0
2018Interim dividend20.043.0N/A
Final dividend23.0
2019Interim dividend25.053.0
Final dividend28.0
2020Interim dividend15.931.8
Final dividend15.9

Over the years, OCBC has paid consistently growing dividends.

In 2008, the bank paid out 28.0 Singapore cents per share in total dividends.

That grew to 53.0 Singapore cents per share in 2019, giving a CAGR of around 6%.

In 2020, OCBC dished out a total dividend per share of 31.8 Singapore cents, which is 60% of the previous year’s dividend (in line with the MAS cap).

OCBC Dividend Policy

The following shows OCBC’s dividend policy, as stated in its annual report:

“Our dividend policy aims to provide shareholders with a sustainable and progressive dividend that is consistent with our long term growth.”

OCBC’s dividends are indeed sustainable, as we will see next.

OCBC Dividend Sustainability

Given OCBC’s conservative dividend payout ratio, its dividends are well-protected.

Companies that pay below 100% of their earnings would leave some room for dividend increases in the future, even if their earnings were to fall.

Here, let’s look at OCBC’s dividend payout ratios from 2016 to 2020:

 20162017201820192020
Earnings Per Share (S$)0.820.951.061.120.80
Total Dividend Per Share (S$)0.360.370.430.530.318
Dividend Payout Ratio43.9%38.9%40.6%47.3%39.8%

OCBC’s dividends are well-covered as it has paid out below 50% of its earnings as dividends over the last five years.

As long as OCBC continues to grow its earnings, it should increase its dividends over time, in line with its dividend policy. This is evident from its historical dividend trend as well.

Looking for a Like-Minded Community of Investors?

That’s what we have here at Seedly, where you can participate in lively discussions regarding bank stocks and everything money! 

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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