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How to Double Your Dividends in Five Years

In previous articles, Motley Fool Singapore’s David Kuo took a look at the highest and lowest dividend yields among the blue chip shares that make up the Straits Times Index (SGX: ^STI).  We’ve scoured the list of blue chips, and found five with the fastest dividend growth over their last five financial years. If you had bought these five shares  in 2008 in equal proportions, your dividends from the portfolio would have roughly doubled after  five years.

Company Dividends Per Share
FY2008 FY2009 FY2010 FY2011 FY2012 Growth
CapitaMalls Asia Limited (SGX: JS8) N.A

1

2

3

3.25

225%

Jardine Cycle & Carriage (SGX: C07)

50

58

98

123

123

146%

Jardine Matheson Holdings (SGX: J36)

75

90

115

125

135

80%

City Developments Limited (SGX: C09)

7.5

8

18

18

13

73%

Olam International Limited (SGX: O32)

2.5

3.5

4.5

5

4

60%

Note: CapitaMalls, City Developments and Olam’s dividends per share figures are given in SG cents. The rest are given in US cents. CapitaMalls Asia had its IPO in Nov 2009 and so no dividend figure was provided for 2008.

Let’s take a closer look at three of them in particular. CapitaMalls Asia owns, develops, and manages shopping malls in 5 Asian countries including Singapore and China. 2012 was a good year for the company as it saw a 19.7% jump in full year net profit to S$546m. Management’s confident of the company’s future as they believe that China will continue to spearhead improvement in the global economy. CapitaMalls’ dividend increase has been tremendous as 2012’s dividend is more than triple that of 2009’s. At 08 March 2012’s share price of $2.00, shareholders stand to pocket a dividend yield of 1.63%, which is lower than the market’s yield of about 2.5%.

Jardine Cycle & Carriage recently reported a modest 4% drop in full year profit in 2012 to US$987m. The company owns 50% of Astra, an Indonesian conglomerate that is not only one of the biggest palm oil producers in Indonesia, but is also involved in the automobile, banking and mining industries. Jardine C&C is part of the Jardine Matheson Group, a complex conglomerate holding company that has substantial ownership of Jardine Matheson Holdings and Jardine Strategic Holdings (SGX: J37), amongst others. Jardine C&C currently sports a dividend yield of 2.8% based on a share price of S$54.50.

Agriculture business firm Olam hit national business headlines in November last year when short seller Muddy Waters started an on-going tussle with the company over its business model and accounting issues. Olam’s half-yearly earnings release in February 2013 saw both turnover and earnings per share increase by 24.3% and 17.8% respectively. Turnover was S$9.59b while EPS came in at S$0.078. Olam’s shares have a dividend yield of 2.4% based on its 08 March 2013 share price of S$1.67.

Foolish Bottom Line

Some companies might have dividend yields that look unattractive in the short-term but the growth in their dividends over time can result in very attractive yields on an initial cost-basis in the long term. However, regardless of how fast a company’s dividend is growing or how attractive its yield might be, Foolish investors should always focus on the sustainability of that dividend.  To keep up-to-date with the best dividends shares in Singapore, click here now for your FREE subscription to Take Stock Singapore. Take Stock Singapore is The Motley Fool’s FREE investing newsletter written by David Kuo. It tells you exactly what’s happening in today’s markets and shows you how you can GROW your wealth in the years ahead.

The Motley Fool’s purpose is to help the world invest, better. 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.