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What Does the Future Hold for Dividend Stock Singapore Press Holdings Limited? – Part 1

Shares of Singapore Press Holdings Limited  (SGX: T39) – or better known as SPH – has mostly kept up with the market over the last five-plus years.

To that point, the company has seen its shares rise by 11.5% from 1 January 2010 to its closing price of S$4.07 yesterday. By comparison, the capital gains of the SPDR STI ETF (SGX: ES3) is 13.5% for the same duration; the SPDR STI ETF is a proxy for Singapore’s market barometer, the Straits Times Index (SGX: ^STI).

As a dividend payer, SPH has done a little better. It has paid out a sizeable total of $1.36 per share in dividends over the same period and has kept its payouts relatively steady.

Financial year ended 31 August Dividend per share (Singapore cents)
2010 27
2011 24
2012 24
2013 40
2014 21

Source: SPH’s Website; SPH’s Earnings Report

While SPH’s share price has been lumbering along, as Foolish investors, we can still look behind the covers to understand the levers it can pull for future growth.

A closer look

SPH may be best known as a publisher of most of the major newspapers here in Singapore (think The Straits Times, The Business Times, and so on).

But there’s more to the company beyond that: It also engages in property development and other activities like events management. In addition, the firm’s also the majority owner and manager of SPH REIT (SGX: SK6U), a real estate investment trust which owns retail malls. Currently, there are only two malls in SPH REIT’s portfolio and they are namely Paragon and Clementi Mall.

SPH Revenue Segment

Source: SPH’s Earnings Report

From the financial year ended 31 August 2010 (FY2010) to FY2014, SPH’s top-line has slipped by a total of 12%. The majority of the fall in revenue came from the property segment. But, SPH’s largest segment – the newspaper and magazine segment – has been rather stagnant as well.

This dynamic with the newspaper and magazine segment may not be all that surprising given that SPH has had to grapple with a transition to digital newspaper formats (see chart below) and fend off competition from online advertising platforms.

2015-06 SPH Presentation Slide

Source: SPH’s presentation slide for FY2014

Defending its advertising stake would be important for SPH as its newspaper and magazine segment made up about 77% of FY2014’s sales. With that, we may want to keep our eyes on whether the growing digital circulation can eventually lead to higher advertising revenue.

Foolish summary

The exercise above is to look at various aspects of SPH’s sales.

As a next step, we should observe the company’s bottom-line, cash flows, and balance sheet as well as that would be what can boost growth in its share price as well as provide the fuel for future dividends. But, that’s for the next article.

Based on yesterday’s close, SPH is trading at a trailing price-to-earnings ratio of about 18.5, and has a dividend yield of around 5.2% (based on its dividend for FY2014).

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.