StarHub Ltd (SGX: CC3) is one of the three companies that are in Singapore’s telecommunications industry. It currently has five business segments, namely, Mobile services, Pay TV services, Broadband services, Enterprise Network services, and Handset sales.
Here are three things about the company that investors may want to know:
1. Consistent profitability over past decade
The 10 years from 2005 to 2015 have seen StarHub deliver consistent profitability. Moreover, the telco has managed to grow its revenue and earnings per share at compound annual rates of 4.5% and 7.5% in that period.
History is no guarantee of the future, but it can provide us with some indication on the sustainability of a company’s business.
2. History of stable dividends
Telcos tend to have stable streams of recurring revenue which can help form the basis for stable dividends.
In StarHub’s case, it has been paying an annual dividend since at least 2005. Those dividends have grown from S$0.09 per share in 2005 to S$0.20 per share in 2015. Payout growth has been a little slow in recent years though – StarHub has maintained its dividend at S$0.20 per share since 2010.
At its current share price of $3.63, StarHub has a dividend yield of 5.5% thanks to its annual dividend in 2015.
3. Balance sheet
A company’s balance sheet is an important area to look at and one of the main items to focus on in the balance sheet is the gearing ratio, also known as the debt to equity ratio.
In general, the higher the gearing ratio is, the more financial risks a company is taking on. In StarHub’s case, its gearing ratio is at 366% currently.
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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 Lawrence Nga doesn’t own shares in any companies mentioned.