Its historic dividend yield of 4.6% is considerably higher than the average for Singapore’s blue chips. Typically, Straits Times Index (SGX: ^STI) companies pay around 3%. So, StarHub’s generous payout stands head and shoulders about the rest.
StarHub’s clever use of “other people’s money” to boost shareholder return is another likeable quality. Of the 30 companies that make up the Singapore benchmark index, StarHub’s Return on Equity (RoE) is around 90 times higher than the blue chip average. Whilst its Net Income Margin is not especially high and its Asset Turnover is respectably good, it is the company’s use to debt that has enabled it to achieve a mouth-watering RoE of over 800%.
Finally, StarHub is a very Singapore focussed business. Unlike its larger rival SingTel (SGX: Z74), which generates most of its revenues in Australia and India, StarHub is a pure play on the Singapore market. The upshot is that investors are not as exposed to currency movement.
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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 Director David Kuo doesn’t own shares in any companies mentioned.