These 5 Singapore Stocks Managed to Increase Dividends Despite the Pandemic
Sudhan Pâ—Ź
I like to look out for companies that increase their dividends yearly on a consistent basis.
Such a company usually signals to the market that it has a great underlying business.
On that note, let’s look at five companies that made shareholders jump in joy by raising their dividends.
Company #1: Micro-Mechanics
Micro-Mechanics (Holdings) Ltd (SGX: 5DD) is involved in the production of consumables and high-precision tools for the semiconductor industry.
For Micro-Mechanics’ second quarter of 2021 (2Q FY2021), revenue grew 15.2% year-on-year to a record S$18.7 million due to growth in the global semiconductor industry.
China, Micro-Mechanics’ largest geographical market, saw a 28% increase in sales to S$5.8 million.
The company’s net profit for the quarter rose 24.6% to S$4.5 million, up from S$3.6 million a year back.
With the higher profitability, Micro-Mechanics’ interim dividend rose 20% to 6.0 Singapore cents per share, up from 5.0 cents per share one year back.
Micro-Mechanics has increased its dividend since going public by a whopping 1,400%, from 0.8 cent in FY2003 to 12.0 cents in FY2020.
It’s likely that the company can continue increasing its dividend in the future on the back of a rosy outlook for the semiconductor industry.
According to VLSI Research, chip sales could double to nearly US$1 trillion by 2030.
In the shorter term, the World Semiconductor Trade Statistics (WSTS) expects the global semiconductor market to grow by 8.4% in 2021, with growth expected in all product categories and regions.
The usage of chips is only poised to grow with the ever-increasing usage of gadgets and technology in our everyday lives.
At Micro-Mechanics’ share price of S$3.15, it has a price-to-earnings (P/E) ratio of 26 and a dividend yield of 4.1%.
Company #2: Riverstone
Riverstone Holdings Limited (SGX: AP4) is a manufacturer of nitrile and natural rubber cleanroom gloves (used in highly controlled and critical environments) and premium nitrile gloves (used in the healthcare industry).
COVID-19 has certainly helped Riverstone’s business to thrive.
For 2020, the company recorded an 85% year-on-year increase in revenue to RM1.83 billion as a higher quantity of healthcare and cleanroom gloves were shipped during the year.
Apart from the increased usage of gloves in the healthcare sector due to the pandemic, Riverstone’s high-end cleanroom glove business has experienced significant growth as well.
The growth has been driven by the advent of the fifth-generation (5G) mobile network and manufacturing industries such as lenses, batteries and semiconductors.
With a smaller increase in the cost of sales and operating expenses, net profit ballooned 396.3% to a record high of RM647.3 million for 2020.
As a mark of confidence in Riverstone’s future outlook and to reward its loyal shareholders, the company’s board has recommended a final dividend of 16.0 sen per share and a special dividend of 4.0 sen per share, bringing the total dividend for 2020 to 22.0 sen.
This marks a steep increase of 495% from 3.7 sen paid out in 2019.
Looking ahead, Riverstone believes demand for healthcare and cleanroom gloves will remain high due to the ongoing COVID-19 testing and vaccine rollout, which require the usage of gloves.
Higher awareness of hygienic practices globally has also led to an increased usage of gloves in the medical and non-medical sectors such as F&B and retail.
To keep up with gloves demand, Riverstone’s production capacity will increase by up to 1.5 billion pieces each year to reach a total of up to 15 billion pieces of gloves per year by end-2023, representing a growth rate of some 43%.
At Riverstone’s share price of S$1.36, it has a P/E ratio of 10x and a dividend yield of 5.3%.
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Company #3: Singapore Exchange
Singapore Exchange Limited (SGX: S68) (SGX) would be a name familiar to all Singapore investors. If you wish to buy local shares, you have to go through SGX and there are no two ways about it.
For the first half ended 31 December 2020 (1H FY2021), SGX’s revenue increased by around 9% to S$520.8 million, up from S$478.5 million a year ago. Meanwhile, its net profit grew by 12.4% to S$239.8 million.
SGX declared a quarterly interim dividend per share of 8.0 Singapore cents, up 7% from 7.5 cents a year ago.
This is in line with the exchange’s dividend policy, as mentioned in the final quarter of FY2020:
“Barring unforeseen circumstances, the annualised quarterly dividend going forward will be 32 cents per share, an increase of 7%. The higher quarterly dividend is in line with our policy to pay a sustainable and growing dividend over time, consistent with our long-term growth prospects.”
SGX has been paying a “sustainable and growing dividend over time” indeed. Here’s a look at the exchange’s dividend history:
At SGX’s share price of S$10.06, it has a P/E ratio of 22x and a forward dividend yield of 3.2%.
Company #4: Sheng Siong
Sheng Siong Group Ltd (SGX: OV8) stole the headline late last month when an internal memo showed that its employees will receive bonuses of up to 16 months, including the annual wage supplement (AWS).
It’s not hard to see why.
For the full year ended 31 December 2020, the supermarket chain’s revenue surpassed the S$1 billion-mark, growing 40.6% to S$1.39 billion on the back of elevated demand arising from the pandemic.
Other income ballooned 362% to S$41.2 million as it was boosted by higher government grants such as the Job Support Scheme, and rental, foreign workers levy, and property tax rebates.
Administrative expenses, which include staff cost, increased by around 42%.
Staff cost grew as a result of higher headcount, longer working hours, an additional month of salary paid in the 2020 second-quarter to reward staff for their diligence during a period of elevated demand, and higher provision for staff bonuses.
Sheng Siong’s net profit for 2020 rose 83.7% year-on-year to S$139.1 million largely due to the strong growth in revenue, better gross margin, and higher other income.
Shareholders will be delighted to note that Sheng Siong’s total dividend for 2020 would increase to 6.5 Singapore cents per share, up 83% as compared to 2019’s total dividend of 3.55 cents per share.
At Sheng Siong’s share price of S$1.57, it has a P/E ratio of 17x and a dividend yield of 4.1%.
Company #5: Wilmar
Wilmar International Limited (SGX: F34) is Asia’s leading agribusiness group.
For 2020, the company declared the highest dividend since its listing. But before we get there, let’s look at how the company performed for the year.
For the year ended 31 December 2020, Wilmar’s revenue rose 18.5% year-on-year to US$50.53 billion while its net profit grew 18.6% to US$1.53 billion.
Wilmar said that despite the challenging COVID-19 pandemic, its resilient business model has proven to be effective, with a strong performance recorded across all its core businesses in 2020.
With the higher profitability, Wilmar declared a record total dividend of 19.5 Singapore cents for 2020. This includes an interim dividend of 4.0 cents already paid out, a final dividend of 9.0 cents, and a special dividend of 6.5 cents per share.
The latest dividend marks an increase of 56% from the total dividend of 12.5 cents per share paid out in 2019.
At Wilmar’s share price of S$5.31, it has a P/E ratio of 22x 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. The writer owns shares in Micro-Mechanics and Singapore Exchange.
