3 Cash-Rich, Rock-Solid Singapore Stocks With REIT-Like Dividend Yields
Dividends, who doesn’t love ’em?
Here, let’s look at three companies that could be strong candidates to be in a dividend investor’s portfolio.
Those companies have strong cash-generating abilities and rock-solid balance sheets containing loads of cash with little or no debt.
They also have dividends yields of above 3% each, with one stock having a yield of over 7%.
The tasty yields are sure to attract income investors at a time when the REITs are either cutting their distributions or seeing their unit prices run up quickly, tanking their yields to below 4%.
Company #1: PNE Industries Ltd
PNE Industries Ltd (SGX: BDA) operates in two business segments of contract manufacturing and trading. The products sold under the first segment include electronic controllers and other electrical and electronic products.
PNE has paid dividends at least once annually since 2007.
The following table shows PNE’s dividend per share and dividend payout ratio over the last couple of years (the company has a 30 September year-end):
FY2017 FY2018 FY2019
Ordinary dividend per share (Singapore cents) 5.0 5.0 5.0
Special dividend per share (Singapore cents) 7.0 1.0 4.0
Total dividend per share (Singapore cents) 12.0 6.0 9.0
Dividend payout ratio 41% (excluding special dividend) and 98% (including) 79% (excluding special dividend) and 95% (including) 52% (excluding special dividend) and 93% (including)
We can see that PNE has paid out stable and conservative dividends.
The company doesn’t have any formal dividend policy, but its dividend payout ratio (including special dividends) have always conservatively been below 100%.
PNE also has a rock-solid balance sheet with loads of cash and zero borrowings. As of 31 March 2020, it had S$47.6 million in cash and bank balances.
It also generated ample free cash flow for the half-year ended 31 March 2020. Free cash flow surged by over 400% to around S$12.2 million.
PNE’s strong cash generation ability should allow it to continue paying dividends for FY2020, despite the uncertainties brought about by COVID-19.
It has already paid out an interim dividend of 3.0 cents per share (includes 1.0 cent in special dividend) for the year, same as the previous year.
Company #2: Valuetronics Holdings Limited
Valuetronics Holdings Limited (SGX: BN2) is an integrated electronics manufacturing services provider with its headquarters in Hong Kong.
The company offers a wide range of design, engineering, manufacturing, and supply chain support services for electronic and electro-mechanical products.
Valuetronics was listed in March 2007 and it has been paying dividends since then (the company has a 31 March year-end).
Valuetronics has a conservative dividend policy of paying out 30% to 50% of its net profit as ordinary dividends. In FY2020, its dividend payout ratio was 48.5%.
With a cash position of HK$1.05 billion and zero debt at end-March 2020 and strong cash flow generating abilities, Valuetronics is highly likely to continue dishing out growing dividends in the future.
At Valuetronics’ share price of S$0.575, it has a P/E ratio of 7x and a dividend yield of 6.1%.
Company #3: Venture
Venture Corporation Ltd (SGX: V03) is a global electronics services provider that supports designing, manufacturing, and e-fulfilment of high-mix, high-value and sophisticated products.
Shareholders would be delighted to note that Venture’s total dividend from FY2015 to FY2019 had grown by 40% in all (the company has a 31 December year-end).
|Total dividend per share (Singapore cents)||50.0||50.0||60.0||70.0||70.0|
|Dividend payout ratio||90%||77%||48%||55%||56%|
We can see from the table above that Venture’s dividend payout ratio has been below 100% throughout the past five years.
Venture doesn’t have a formal dividend policy, but it aims to pay dividends that are on par or more than the previous year.
In the first half of 2020, its interim dividend per share rose 25% year-on-year to 0.25 Singapore cents. The higher dividend was supported by free cash flow growth of 20.6% year-on-year.
That made Venture to be featured as one of the companies that managed to raise its dividend amid dividend cuts by others.
Just like PNE and Valuetronics, Venture’s balance sheet is rock-solid. As of 30 June 2020, it had S$834.1 million in cash balance with bank loans of just S$1.1 million.
At Venture’s share price of S$20.41, it has a P/E ratio of 19x and a dividend yield of 3.7%.
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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.