Are These The Perfect Dividend Companies?

There is one important aspect that dividend investors focus on – dividends.

Some companies on the Singapore Exchange offer very attractive dividends. Here are two of them. We take a look at each of them to see if their strong dividend growth and yields can be sustained in the future.

Sim Lian Group Ltd

A reputable construction and property company in Singapore, Sim Lian Group Ltd (SGX: S05) has been showing impressive growth over the past decade. Since FY2005, its revenue has grown from just S$149.4 million to the current S$1.19 billion. That is a 23% annual growth over the past 10 years.

The company is trading at S$0.91 per share and offers a dividend yield of 8.2%. More impressively, its dividend is only 19% of its FY2015 total net income. Its ordinary dividend per share has also increased from just S$0.01 per share to the current S$0.07 per share in its last financial year. Moreover, its balance sheet continues to be strong, even as the property sector in Singapore slowed down. In its latest financial year, the company still maintained a net cash position, which is a very unusual position for a construction company.

Vibrant Group Ltd

Vibrant Group Ltd (SGX: BIP) is another company offering an attractive yield of 7.4% currently. The conglomerate has interests in the logistic, financing and real estate sector. In fact, it is the sponsor, manager and largest unit holder of Sabana Shariah Compliant REIT (SGX: M1GU).

The company also grew its revenue from S$84.3 million in FY2005 to S$203.2 million in FY2015 – an impressive 9.1% annual growth over the decade. The company paid out about S$0.03 per share in dividend in FY2015. However, the company does make use of leverage more aggressively than Sim Lian Group. In its latest quarter, its net debt to equity stands at 59%.

Foolish Summary

With the sharp slowdown in the property sector in Singapore, will the dividend from Sim Lian Group be under threat? Similarly, if the economy slows, will the relatively large debt level of Vibrant Group be a threat to its business in the future? These are questions to think about before investing in these companies.

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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 doesn’t own shares in any companies mentioned.