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Some Steady Dividends through Good Times and Bad

Money tree 2The dividend aristocrats in the USA have always fascinated me. They are a group of companies that have had at least 25 years of consecutive dividend increases. Some in the group, like cigarette maker Altria and the conglomerate 3M, have seen up to forty years of annual dividend increases.

Those dividends have helped deliver tremendous total returns (capital gains plus gains from reinvested dividends) for their investors. For instance, since the start of 1970, capital gains from Altria and 3M have come in at 10,976% and 1,882% respectively.

Factor in reinvested dividends however, and those returns become mind boggling. For Altria, its total return stands at 279,255%. Meanwhile, the corresponding figure at 3M becomes 7,314%.

Looking at such figures, the ability of companies to steadily increase their dividends over the long-term is not something investors should ignore. Can we find such companies in Singapore though?

As a start, we can find out which companies actually managed to grow or maintain their dividends from 2005 till today, where even the Great Financial Crisis of 2007 to 2009 couldn’t ding their pay-out.

There are a number of blue chips within the Straits Times Index (SGX: ^STI) that have had such a history. So, I decided to traverse down the market cap ladder to take a look at some of the mid and small caps.

Turns out, there are a handful that do exhibit the required criteria. They include Singapore-focused retail mall real estate investment trust Frasers Centrepoint Trust (SGX: J69U), instant beverage maker Super Group (SGX: S10), and food manufacturer QAF (SGX: Q01).

In addition, there’s also the China-focused retail mall REIT CapitaRetail China Trust (SGX: AU8U), and Kingsmen Creatives (SGX: 5MZ), a small-cap company that produces exhibition displays for museums, theme parks, and retail shops, among others.

Financial Year Dividends for FCT(Singapore cents) Dividends for Super Group      ( Singapore cents) Dividends for QAF(Singapore cents)
2005 1.6 2.0
2006 4.35 1.6 2.0
2007 6.00 1.6 2.0
2008 7.29 1.6 2.0
2009 7.51 2.6 3.0
2010 8.20 5.4 4.0
2011 8.32 5.8 5.0
2012 10.01 7.1 5.0
2013** 10.93
**FY 2013 for both Super Group and QAF isn’t completed yet.

Source: S&P Capital IQ

Financial Year Dividends for CRCT (Singapore cents) Dividends for Kingsmen Creatives (Singapore cents)
2005 0.67
2006 1.33
2007 5.76 2.00
2008 7.53 3.00
2009 8.14 3.50
2010 8.36 4.00
2011 8.70 4.00
2012 9.54 4.00

Source: S&P Capital IQ

It’s important to note here that even though these companies have had a nice multi-year history of steady dividends through both good times and bad, it’s by no means a guarantee that they can become dividend aristocrats in the future. In fact, their dividends might just fall way short in the years ahead.

The dividend history of companies are useful as a tool to clue us in to potentially-strong businesses, but as always, further research has to be done.

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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 writer Chong Ser Jing owns shares in Super Group and Kingsmen Creatives.