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Three of Singapore’s Fastest Growing Dividends

Money tree 2

Dividends are a great source of secondary income for investors. Companies that have the ability to fund growing dividends because of better profits, larger cash flows and a stronger balance sheet would be akin to the proverbial cash-cow for shareholders.

Let’s take a look at some companies that have increased their dividends substantially in their last five completed financial years.

Company Dividends Per Share, Singapore Cents Annualised Dividend Growth Cumulative Dividend Growth
FY2008 FY2009 FY2010 FY2011 FY2012
Super Group
(SGX: S10)
1.6 2.6 5.4 5.8 7.1 45% 340%
Vicom (SGX: V01) 9.25 11.8 16.1 17.6 18.2 18.4% 97%
Raffles Medical Group (SGX: R01) 2.5 3 3.5 4 4.5 15.8% 80%

Super Group, an instant-beverage manufacturer, has seen its profits almost triple from S$25.1m in 2008 to S$79m in 2012. Much of the company’s growth can be attributed to the rise of its Ingredients Sales division, where revenues have gone up by more than four times from S$31.2m in 2009 to S$164.1m in 2012.

But, it’s hard to keep up with such explosive growth for Ingredients Sales in the long run and there are signs of it slowing down. The company’s first quarter results for 2013 saw a year-on-year increase of 33% in quarterly revenue for the Ingredients Sales division, a far cry from the 87% jump in sales figures for it from 2009 to 2010.

To prevent the galloping growth-engine from running out of steam, management’s building a botanical herbal extract (BHE) facility in Malaysia that’s slated to start operations by the end of this year. The BHEs will be a new product line for the company’s Ingredients Sales division, adding to existing lines of Dairy Creamers and Soluble Coffee Products.

Shares of Super Group are worth $4.60 currently, and carries a lofty Price-Earnings multiple of 30.7 and dividend yield of 1.5%

Vicom will be familiar to drivers in Singapore who have to send their cars for annual inspections. The company runs seven out of nine vehicle inspection centres in Singapore. But, it’s hardly a one-trick pony as vehicle inspection made up only 34% of the company’s revenue in 2011 (Vicom has ceased reporting different segmental results in 2012).

The other aspect of Vicom’s business, dubbed as Non-vehicle Testing & Inspection, involves a wide array of testing and inspection services that are carried out under the SETSCO umbrella. These include “quality assurance testing and evaluation of building materials, structural and chemical analysis, food and microbiological analysis, environmental monitoring, amongst others”. Top-line growth from Non-vehicle Testing & Inspection has clocked in at 11.4% per year for the decade ending 2012, bringing in an operating profit that has compounded at 25.3%.

Along with Vicom’s growth in dividends, shareholders have also been treated to a 67% increase in profits from 2008’s S$15.8m to 2012’s S$26.4m. Those are strong business results, but earnings growth seems to have slowed lately as the company’s first quarter for this year delivered only a 6.5% bump up in quarterly earnings to S$7.5m from S$7.0m last year.

Vicom’s shares are now selling for 15.8 times its last 12 months’ earnings – with a dividend yield of 3.8% – at its current price of $4.80.

Last on the list is health-care provider, Raffles Medical Group. As a company, they run the eponymous Raffles Hospital in Singapore, along with a host of medical clinics. Overseas gigs for the company include four medical centres, with three in Hong Kong and one in Shanghai.

The company has seen consecutive yearly revenue increases starting from at least 2004, where it brought in S$101.5m in sales. With a top-line of S$311.6m last year, sales of the company has tripled since. While it’s great to see a company bringing in more revenue, it would count for naught if it couldn’t be turned into bigger profits. On that front, RMG did not disappoint – earnings for the company more than quintupled from S$10.1m to S$56.8m in the same period.

Being the lowest priced share of these three companies at $3.31 does not necessarily mean it’s the cheapest of the lot. RMG’s shares carry the highest PE multiple among the three at 30.9 and also the lowest dividend yield at 1.4%.

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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.