When we think of retirement, most of us will picture an idyllic existence where we can engage in activities we enjoy without having to worry about money.
Having the freedom to choose what you want to do when you retire is possible, but you will need to prepare yourself financially first.
And the first step to doing so is to start investing in strong companies that pay regular, consistent dividends.
These dividends act as a passive income source that can help you to maintain your lifestyle during retirement.
This cash inflow can also help to supplement other forms of income such as those from rental or annuities.
If you’re worried that you may not have enough in your investment portfolio to retire comfortably, the best advice is to start investing right now.
The power of compounding, done over many years, can allow a small initial sum to grow into a comfortable pot of money by the time you are ready to retire.
Here are three dividend-paying companies that may be suitable for your retirement portfolio.
Boustead Singapore Limited (SGX: F9D)
Boustead Singapore Limited, or BSL, is a global engineering and technology conglomerate with four main divisions.
These divisions are energy-related engineering, real estate solutions, geo-spatial technology and healthcare.
The first two divisions have been hit hard by the COVID-19 pandemic, but the group has managed to deliver a creditable performance as management is known to be prudent and conservative.
For the full fiscal year 2020 ended 31 March 2020, revenue rose by 54% year on year while adjusted net profit improved by 34% year on year to S$36.6 million.
BSL has declared a final dividend of S$0.02, taking total fiscal 2020’s dividend to S$0.03.
Its shares offer a dividend yield of around 4.2%, and the group has a track record of paying out dividends even during crises such as the Global Financial Crisis back in 2008-2009.
The group’s balance sheet remains robust with S$281.7 million of cash and around S$119 million of borrowings.
Free cash flow for the year was strong at around S$135 million despite the challenges its major divisions are facing,
CEO Wong Fong Fui expects BSL to deliver steady performance for the fiscal year 2021, though he cautioned that things could get worse if the COVID-19 pandemic results in further lockdowns and movement restrictions.
The group’s geo-spatial division had, back in August, clinched a landmark A$30 million contract from the Australian government, showing that it can continue to deliver even amidst the crisis.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a pure-play data centre REIT that owns a portfolio of 18 data centres across eight countries.
The REIT has demonstrated that it can continue to grow during this crisis as data centres provide essential services and are allowed to continue operating without disruption.
In a business update released this week, Keppel DC REIT reported a 46% year on year jump in revenue for its third quarter.
Distribution per unit (DPU) jumped 22.1% year on year to S$0.02357, and for the first nine months of 2020, DPU rose by 16.5% year on year to S$0.06732.
DPU has been growing over the years as the REIT pursues acquisitions and also engages in organic growth through asset enhancement initiatives.
Aggregate leverage stands at 35.2% as of 30 September, leaving further room for the REIT to gear up for DPU-accretive acquisitions.
The future looks bright for Keppel DC REIT as data centres continue to enjoy strong demand arising from an anticipated 31% annual growth in global mobile data traffic from 2019 to 2025, as well as higher enterprise spending on cloud infrastructure.
Investors should also note that the REIT was recently added to the Straits Times Index (SGX: ^STI).
Haw Par Corporation Ltd (SGX: H02)
Haw Par is a conglomerate that has four core divisions: healthcare, leisure, property and investments.
The group is well-known for its Tiger Balm brand of ointments and pain patches, and its products are distributed globally.
For the first half of 2020, revenue fell nearly 44% year on year to S$80.9 million as lockdowns and border closures crimped demand for the group’s products.
The scrapping of major sports events also dampened demand for their pain patches and gels, while tourist flow would have been impacted for their leisure asset Underwater World Pattaya.
Net profit for the period fell by 19% year on year to S$91 million.
However, the group maintained a strong balance sheet with S$580.1 million of cash and no debt.
Operating cash flow remained positive, and the group also received S$56.1 million in dividend income from its stake in UOL Group Limited (SGX: U14) and United Overseas Bank Limited (SGX: U11).
Despite the weaker performance, Haw Par continued to declare an interim dividend of S$0.15, flat year on year.
Trailing 12-month dividend stands at S$0.30, and the shares offer a dividend yield of 3.2%.
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Disclaimer: Royston Yang owns shares in Keppel DC REIT and Boustead Singapore Limited.
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