Forget Singtel: Here are 3 Better Dividend Stocks

Royston Yang
·5-min read
Forget Singtel: Here are 3 Better Dividend Stocks

Veteran investors may remember Singtel’s (SGX: Z74) IPO back in 1993 when shares of the bellwether blue-chip telecommunication company (telco) were offered to the general public at a generous discount.

Fast forward to today, and Singtel remains a telecommunication powerhouse that offers mobile, cable TV and broadband services.

Younger investors could be attracted to the telco’s strong market position and history of paying out dividends.

However, the pandemic has wreaked havoc on Singtel’s business.

For its latest fiscal 2021 third-quarter earnings report, the mobile giant reported a 9% year on year dip in revenue for the first nine months of the fiscal year.

In turn, operating profit plunged by 42.4% year on year as roaming and prepaid mobile revenue was adversely impacted.

As a result, Singtel announced a reduction in its interim dividend from S$0.068 to S$0.05 when it reported its half-year results in November last year.

Investors who are looking for a more reliable dividend stock might want to look beyond Singtel and consider these other three businesses instead.

DBS Group Holdings Ltd (SGX: D05)

DBS is one of Singapore’s three largest banks and provides a comprehensive range of banking and investment services to individuals and corporations.

The lender has fared better when confronting the economic challenges brought about by the crisis.

For its full-year 2020 earnings, total income remained flat year on year at S$14.6 billion.

Profit before allowances rose 2% year on year to hit S$8.4 billion.

As the bank had to increase its provisions to account for potential bad loans, this caused net profit to tumble 26% year on year to S$4.7 billion.

Despite the weaker performance, DBS still paid out a final dividend of S$0.18, in line with the Monetary Authority of Singapore’s (MAS) call for banks to moderate their dividend payments in light of the crisis.

The bank ended up paying out a total dividend of S$0.87 per share for 2020, lower than the S$1.23 that was paid in 2019.

However, investors should note that CEO Piyush Gupta has reiterated that he is confident that dividends can return to pre-pandemic levels “fairly rapidly” once the MAS lifts dividend restrictions.

At a share price of S$28.65, DBS shares offer a trailing 12-month dividend yield of around 3%.

Singapore Exchange Limited (SGX: S68)

Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange.

The bourse operator’s platform allows clients to buy and sell a variety of securities such as equities, bonds and derivatives.

SGX has held up remarkably well during the pandemic, as demonstrated by its recent fiscal 2021 half-year earnings.

Revenue rose 9% year on year to S$521 million while net profit after tax was up 12% year on year to S$240 million.

The exchange continues to report healthy demand for its suite of products, with its freight derivatives setting a record open interest in February.

The bourse has also welcomed several new, high-profile IPOs recently, including Aztech Global (SGX: 8AZ) and Nanofilm Technologies (SGX: MZH).

In addition, SGX recently sealed a deal with New Zealand’s Exchange to scale up market distribution and liquidity in the global dairy derivatives market.

For the latest quarter, an interim dividend of S$0.08 was declared, up from S$0.075 a year ago. Trailing 12-month dividends stand at S$0.32.

SGX’s shares offer a dividend yield of around 3.2% at the last traded price of S$10.03.

Micro-Mechanics (Holdings) Ltd (SGX: 5DD)

Micro-Mechanics, or MMH, designs and manufactures high-precision tools and parts used in the semiconductor industry.

The group has seen healthy demand for its products as global usage of electronic devices has surged due to pandemic.

More data is being consumed as people turn to e-commerce and digital payments, leading to increased demand for electronic parts.

For its fiscal 2021 half-year ended 31 December 2020, MMH reported a 16.7% year on year increase in revenue to S$36.9 million.

Profit after tax surged by 33% year on year to S$9.1 million.

The group raised its interim dividend by 20% year on year to S$0.06.

For its full fiscal year 2020, MMH declared a final dividend of S$0.05 and a special dividend of S$0.02, bringing the trailing 12-month dividend to S$0.13.

At a share price of S$3.41, the electronic group’s shares offer a trailing dividend yield of 3.8%.

Moving forward, the World Semiconductor Trade Statistics (WSTS) is anticipating growth of 8.4% this year for global semiconductor sales.

This statistic should provide strong tailwinds for MMH’s future growth.

In our latest special FREE report, we cover eight stocks, consisting of a mix of blue-chips and mid-cap companies, that we believe can ride the recovery and offer investors a great mix of both growth and income. Click HERE to download the report, 8 Singapore Stocks for Your Retirement Portfolio, for FREE now! 

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Disclaimer: Royston Yang owns shares in DBS Group, Singapore Exchange Limited and Micro-Mechanics (Holdings) Ltd.

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