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Three Shares with a Strong History of Dividend Growth

There are professional investors who have managed to beat the market convincingly by employing investing strategies that focus almost exclusively on companies with consistent growth in dividends. In addition, a company’s history of dividend growth could also give investors vital clues on the sustainability of its dividends.

With such utility, it would thus make sense for investors looking for potential investing opportunities to start with shares that have managed to either grow or maintain their dividends over the past 10 years. Here are three such shares.

1. Super Group (SGX: S10)

The company behind instant coffee brands like Super and Owl has seen great growth over the past decade. Since 2003, revenue and profits at Super Group have grown by an annual compounded rate of 14.5% and 24.5% respectively. At last count, sales of Super Group were at S$557 million while profits came in at S$100 million.

While it’s not uncommon for growth shares to prefer retaining their earnings to fund their growth initiatives, Super Group has certainly not been shy in sharing the spoils with its shareholders as judged from its growing dividends over the years.

Year

Dividends per share (Singapore cents)

2003

0.78

2004

1.20

2005

1.60

2006

1.60

2007

1.60

2008

1.60

2009

2.60

2010

5.40

2011

5.80

2012

7.10

2013

9.00

Source: S&P Capital IQ

Super’s shares are currently worth S$3.50 each and are valued at 19.5 times trailing earnings with a historical dividend yield of 2.6% based on its dividends for 2013.

2. Jardine Strategic Holdings (SGX: J37)

An integral part of the Jardine Matheson Group, Jardine Strategic Holdings holds majority ownership stakes in other publicly-listed companies with business interests in a wide variety of industries including real estate development and ownership, retailing, automobile distribution, and oil palm production, among others.

The company is also an important of the Straits Times Index (SGX: ^STI), making up 3.6% of Singapore’s stock market bellwether as of 16 April 2014.

While profits at the company have not been able to grow consistently, its dividends are another story as they have been increasing with each consecutive year since 2003.

Year

Dividends per share (US$)

2003

0.145

2004

0.152

2005

0.160

2006

0.170

2007

0.180

2008

0.190

2009

0.200

2010

0.210

2011

0.225

2012

0.240

2013

0.255

Source: S&P Capital IQ

With its shares at US$35.79 currently, Jardine Strategic Holdings has a historical dividend yield of only 0.7% and carries a trailing price-to-earnings (PE) ratio of 12.8.

3. Hongkong Land Holdings (SGX: H78)

The last company here is actually 50% owned by Jardine Strategic Holdings. It has two main business segments: 1) the ownership of prime commercial and retail properties for rental income and capital appreciation; and 2) the development of high-end residential properties for sale. Hongkong Land Holdings’ business activities are centred on Hong Kong and Singapore for the first segment, and China, Macau, and Singapore, for the second segment.

As a real estate outfit, the company’s unique amongst its peers like City Developments (SGX: C09) and CapitaLand (SGX: C31). While the latter two companies have seen their dividends fluctuate wildly over the past decade, Hongkong Land Holdings – as seen in the table below – has managed to either maintain or steadily grow its dividends in the same period.

Year 

Dividends per share (US cents)

2003

6.0

2004

7.0

2005

8.0

2006

10

2007

13

2008

13

2009

16

2010

16

2011

16

2012

17

2013

18

Source: S&P Capital IQ

At a price of US$6.85, shares of Hongkong Land Holdings are valued at only 0.6 times its tangible book value and have a historical dividend yield of 2.6%.

Foolish Bottom Line

The three shares mentioned above might not have yields that would excite income investors looking for big dividends. But assuming they could continue growing their dividends in the future as they did in the past, investors might be looking at some big yields-on-cost a decade or two from now.

Of course, that can be a big assumption to make and there’s no guarantee that these shares can continue rewarding shareholders with growing dividends in the years ahead. But if anything, those dividend records are rather impressive as it is.

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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.