MENU

3 Dividend Stocks with Healthy Yields

Dividend paying shares are a dime a dozen. A good dividend yield is likely to attract strong investor attention but the dividend yield alone cannot tell us much. So how do we tell if a dividend can be sustained?

Generally, there are some simple financial figures we could look at:

  • Dividends per share: A quick glance at how dividends per share has changed over time can tell us if existing shareholders have been enriched with growing dividends, or not.
  • Earnings per share:  A positive and growing earnings per share ticks the right box for shareholders as it shows their share of profits have increased.
  • Free cash flow per share:  Free cash flow per share that is positive and growing shows that a business is able to generate excess cash from its operations. With more profits and free cash flow, companies can then pay out more dividends.
  • Cash and Debt levels: A business having more cash than debt is financially stable with no imminent threat of large dividend slashes or worse, bankruptcy.

Motley Fool Singapore’s David Kuo recently published 2 articles on blue-chip shares with high and low dividend yields. Today, we take a look at the financial figures of 3 other dividend-paying shares outside the blue chip universe that have yields above the Straits Times Index’s (SGX: ^STI) average of 2.5%.

First up, we have Boustead Singapore Limited (SGX: F9D). The infrastructure engineering and geo-spatial technology company’s figures from its last 5 financial years are shown in the table below, and they look to have ticked most boxes. The company is financially stable and there is a history of steady profits, dividends and cash flow. In more recent news, its third quarter earnings result saw a 173% jump in quarterly profits and a $0.02 dividend per share was declared earlier.

Boustead

2008

2009

2010

2011

2012

Dividends per Share (cents)

5.0

4.0

5.5

7.0

5.0

Earnings per Share (cents)

10.1

11.7

8.5

10.3

11.0

Free Cash Flow per Share (cents)

14.0

5.7

9.5

9.6

16.2

Cash (in millions)

165.3

180.0

223.3

209.8

192.5

Debt (in millions)

14.5

29.5

24.0

25.1

22.0

*Note: Free Cash Flow is defined as Cash Flow from Operations minus Purchase of Plant, Property & Equipment
**Note: All Per-Share figures are calculated using the undiluted share count
***Note: Per Share Figures for 2008 have been adjusted for a stock split

Next we take a look at ARA Asset Management (SGX: D1R). The real-estate fund management company has almost doubled its earnings per share since 2008. Partly because of the capital-light nature of its business, the company is financially stable. Its latest full year earnings report showed that yearly profits have increased by 33%, and a proposal of 1 bonus share for every 10 shares outstanding was also announced.

ARA

2008

2009

2010

2011

2012

Dividends Per Share (cents)

3.35

3.64

4.36

5.00

5.00

Earnings Per Share (cents)

4.78

6.29

9.96

8.88

9.46

Free Cash Flow Per Share (cents)

6.75

6.18

7.16

6.37

10.52

Cash (in millions)

41.90

46.15

42.33

57.29

100.26

Debt (in millions)

0.00

0.00

19.36

0.39

5.07

*Note: Free Cash Flow is defined as Cash Flow from Operations minus Purchase of Plant, Property & Equipment
**Note: All Per-Share figures are calculated using the undiluted share count
***Note: Figures for 2008, 2009 and 2010 are adjusted for Bonus Shares issued in 2011.

Health care and clean room glove manufacturer Riverstone Holdings Limited (SGX: AP4) rounds up the list today. Again we see growing dividends, steady profitability, and financial stability. The company announced in its third quarter that it is on track to expand its glove production capacity to 3.1 billion pieces per year by the end of 2012. An interim dividend of RM 0.022 per share was also declared by management earlier in the year.

Riverstone

2007

2008

2009

2010

2011

Dividends Per Share (sens)

3.33

3.55

5.30

5.90

5.90

Earnings Per Share (sens)

7.38

7.88

9.54

12.98

12.19

Free Cash Flow Per Share (sens)

5.09

0.12

4.44

2.75

3.93

Cash (in millions)

56.95

46.53

47.19

44.15

41.57

Debt (in millions)

2.74

1.40

0.71

0.23

0.00

*Note: Free Cash Flow is defined as Cash Flow from Operations minus Purchase of Plant, Property & Equipment
**Note: All Per-Share figures are calculated using the undiluted share count
***Note: The monetary figures are reported in Malaysian Ringgit

At 25 Feb 2013’s closing prices, shares of Boustead, ARA Asset Management and Riverstone would fetch dividend yields of 3.94% , 2.70% and 4.62% respectively based on the total dividends paid for the companies’ last completed financial year.

Looking at these simple financial figures can never guarantee an investment’s profitability but at the very least, it can help us to manage some risk in our investing process.

Motley Fool’s purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Contributor Chong Ser Jing doesn’t own shares in any companies mentioned.