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The Hunt for High Dividends

Credit: Simon Cunningham

The Singapore Exchange Limited (SGX: S68) recently revamped its website. One interesting new feature is an in-built screening tool for investors to find companies that fit their criteria. I spent some time playing with it, and decided to search for companies with the highest dividend yield in Singapore, and see what the screener would (pun alert ahead) yield.

What did I search for?

I set only a few criteria looking for profitable companies with high dividend yield. This is the four main factors I entered.

1)      Company is profitable

2)      Dividend yield is more than 5.5%

3)      Market capitalisation of the company must be above S$1.0 billion

4)      Not a REIT or a business trust

Let me just state that it was purely a fun exercise to test out SGX’s new screening software. I wanted to only include companies rather than trusts as most trusts would have high dividend yield and the result might end up skewed towards such entities. I also looked for larger and profitable companies in hope to find a company which is more likely to be able to sustain its high dividends. I found three companies that suited my screen.

M1 Limited

M1 Ltd (SGX: B2F) was one of the companies that passed the screen. SGX website states that M1 Ltd currently has a dividend yield of 5.92%. However, M1 Ltd has only distributed one interim dividend of 7 Singapore cent per share this year. Even if we annualized that, it would only give us a dividend yield of 3.9%, similar to data provided by Bloomberg.

Singapore Press Holdings Limited

The SGX screening software indicated that Singapore Press Holdings Limited (SGX: T39) has a dividend yield of 9.17%. Again, checking back to the dividend records of Singapore Press Holdings, the company only provided a dividend yield of 3.59% for the last 12 months. So two searches, two errors from the SGX screener.

Foolish Takeaway

One thing we can take away from this exercise is that the use of a screening software should only be the starting point for us to know which companies to analyse further. We should always double check the result we are getting from the screening software. As you see from the above example, even software can make mistakes.

For those of you who noticed, I mentioned 3 companies earlier on in the article, but I’ve only covered 2. Two companies that were mistakes made by the stock screener. The third company was not a mistake, and I will be covering that in the second part of this article. Stay tuned!

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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 Stanley Lim does not own any companies mentioned